Commercial finance brokers tell it straight

Commercial finance brokers tell it straight



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As the government rolls out one fiscal stimulus after another to cajole the banks into lending, a group of commercial finance brokers report that credit is still nearly impossible to secure for businesses.

The advisers, from ACS Finance, have stated that it’s not only difficult to get money, but the “total lack of consistency” from banks is also a problem. In the company’s annual meeting, held last week, commercial brokers all confirmed that lending remains frozen across the UK.  
 
However, there is some hope for businesses, with the arrival of such measures like the Enterprise Financial Guarantee scheme. Although advisers admit that confusion surrounds it – with the Forum for Private Business saying that 54% of its members think there hasn’t been enough information about it and 20% doubting whether banks even understand it – the plan could prove a lifeline for struggling firms.
 
Introduced by the government in January and designed to free up £1.3 billion in loans to businesses, it may have gotten off to a slow start, but it shouldn’t be dismissed just yet. The EFG can guarantee loans from £1,000 to £1 million for businesses with a turnover of under £25 million, the idea being that with the government reducing the risk, the banks will be more willing to lend the money.
 
Of course in the current climate, banks need to have more safety nets than a trapeze artist if they are going to consider lending to a limited company. This is where director guarantees come in.
 
According to former senior bank lender, Russell Snowdon, who now helps business secure finance through Independent Banking Consultants, a personal guarantee from a director might just be enough to sway a bank manager into signing the funds off.
 
“From a bank's point of view it's good practice to always ask for guarantees from the directors, not only because of their potential security value but also because it focuses the mind if things go wrong. Directors roll their sleeves up and get involved instead of walking away and leaving others to sort out the mess.” Mr Snowdon concluded.
 

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