Small Talk: At last, the banks lend a hand to small firms

 

Whisper it quietly, but Britain's banks may finally be beginning to do their bit by offering more support for small and medium-sized enterprises. In certain areas of the business banking market, there is even evidence of a price war.

The banks are starting from a low base, of course. We know all about the constraints on their lending books, which appear to have prevented them from extending credit to deserving businesses. And we know that when the banks have found spare moments amid the rush to turn down loan applications, they've used the time to flog complicated derivatives products to SMEs – not always appropriately. Barclays said on Friday it was putting £450m aside to pay for compensation in such cases.

Still, there are some signs of improvement. Royal Bank of Scotland said last week that it will be the first bank to begin offering loans under the Government's Funding for Lending scheme, reducing interest rates for SMEs by 1.6 percentage points from 1 August and dropping arrangement fees.

It is encouraging to see evidence of better deals for SMEs in another area of the banking sector too. Business banking – the straightforward provision of accounts to businesses – has for some time been significantly less competitive than personal banking. Personal customers regard free banking as sacrosanct.

While banks have been able to introduce subscription charges for accounts offering extra services, fees for basic banking would be much harder to levy. Introducing transaction charges – a fee for cashpoint withdrawals, say – would be commercial suicide.

In the business sector, the cost of banking remains significant. SMEs have always had to pay for the privilege of depositing their money. But all the high street banks have begun competing much more aggressively for business customers, typically offering long periods of charge-free banking for those who switch to them.

Barclays is offering two years' free banking to business start-ups. Lloyds TSB and HSBC offer 18-month deals while Santander offers free banking for a year. Thereafter, charges vary but typically start from around £5 a month just for having an account.

There's plenty more work to do in improving the banking deals to which SMEs are entitled. One problem is the transparency of business banking charges, with a range of fees payable in certain circumstances. Another is the perception that switching bank account might make it even tougher to get credit.

For these reasons, small businesses remain much less willing to change banks than personal customers have become, which is a disincentive to account providers to compete. Still, switching rates are rising steadily, and the banks have made it much easier to move business accounts, just as they have done in the personal sector.

These are small victories, but for SMEs used to battling the banking sector, they are worth taking.

SVG's new fund will back the minnows

SVG Investment Managers is in the process of seeking to raise £50m to £100m for its Strategic Equity Income Fund.

Run by Adam Steiner and Stuart Widdowson, the fund will invest in smaller companies. It will issue ordinary shares targeting a yield of about 6.5 per cent a year, and less-risky zero dividend preference shares, which will pay the equivalent of 6.5 per cent a year in five years, assuming the fund has the assets to make good on the deal.

Small Businessman of the Week: I liked the sales training course so much I bought it...

Shaun Thomson, managing director, Sandler Training UK

My background is as a chartered civil engineer – I travelled the world for a while, living and working in 57 different companies. I realised I wasn't a big-company person – I get bored easily and I like start-ups.

In 2000, I started a sales and marketing business working with an internet services company. I had 22 sales staff but we just didn't seem to be getting the business I expected. I was talking this through with a former colleague, and he recommended a Sandler Training sales course in the US – I went on it and so did all my staff, and within 18 months we had doubled the size of the business.

At that stage, I asked Sandler why it didn't operate in the UK, and I ended up buying the rights to this country in 2003. I operated as the trial franchisee for a year but we now have 27 franchisees around the country. My aim is to have 50 franchises with around 1,000 clients each, which I reckon would be about a 10 per cent market share.

We work with every size of company across all industries and markets, and our aim is to help sales people really differentiate themselves from what their clients are used to hearing. We talk about being 180 degrees different to traditional sales.

The franchise model works really well for us, because we're all about getting people out of the mindset of employment – we can provide people with the handholds to climb upwards, but we can't do it for them.

PROMOTED VIDEO
Arts and Entertainment
Sheeran arrives at the 56th annual Grammy Awards earlier this year
musicYes, that would be Ed Sheeran, according to the BBC
Arts and Entertainment
AKB48 perform during one of their daily concerts at Tokyo’s Akihabara theatre
musicJapan's AKB48 are one of the world’s most-successful pop acts
News
Ian Thorpe has thanked his supporters after the athlete said in an interview that he is gay
people
News
The headstone of jazz great Miles Davis at Woodlawn Cemetery in New York
news
Arts and Entertainment
Brendan O'Carroll has brought out his female alter-ego Agnes Brown for Mrs Brown's Boys D'Movie
filmComedy holds its place at top of the UK box office
News
newsBear sweltering in zoo that reaches temperatures of 40 degrees
Arts and Entertainment
Professor Kathy Willis will showcase plants from the Royal Botanic Gardens at Kew
radioPlants: From Roots to Riches has been two years in the making
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
TV The follow-up documentary that has got locals worried
Arts and Entertainment
Eminem's daughter Hailie has graduated from high school
music
Arts and Entertainment
Original Netflix series such as Orange Is The New Black are to benefit from a 'substantial' increase in investment
TVHoax announcement had caused outrage
Life and Style
Swimsuit, £245, by Agent Provocateur
fashion

Diving in at the deep end is no excuse for shirking the style stakes

News
One Direction star Harry Styles who says he has no plans to follow his pal Cara Delevingne down the catwalk.
peopleManagement confirms rumours singer is going it alone are false
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Information Security Manager (ISO 27001, Accreditation, ITIL)

£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...

Biztalk - outstanding opportunity

£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...

Trade Desk Specialist (FIX, Linux, Windows, Network Security)

£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...

Service Desk Analyst (Windows, Active Directory, ITIL, Reuter)

£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...

Day In a Page

Super Mario crushes the Messi dream as Germany win the 2014 World Cup in Brazil

Super Mario crushes the Messi dream

Germany win the 2014 World Cup in Brazil
Saharan remains may be evidence of the first race war, 13,000 years ago

The first race war, 13,000 years ago?

Saharan remains may be evidence of oldest large-scale armed conflict
Scientists find early warning system for Alzheimer’s

Scientists find early warning system for Alzheimer’s

Researchers hope eye tests can spot ‘biomarkers’ of the disease
Sex, controversy and schoolgirl schtick

Meet Japan's AKB48

Pop, sex and schoolgirl schtick make for controversial success
In pictures: Breathtaking results of this weekend's 'supermoon'

Weekend's 'supermoon' in pictures

The moon appeared bigger and brighter at the weekend
Iraq crisis: How Saudi Arabia helped Isis take over the north of the country

How Saudi Arabia helped Isis take over northern Iraq

A speech by an ex-MI6 boss hints at a plan going back over a decade. In some areas, being Shia is akin to being a Jew in Nazi Germany, says Patrick Cockburn
The evolution of Andy Serkis: First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes

The evolution of Andy Serkis

First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes
You thought 'Benefits Street' was controversial: Follow-up documentary 'Immigrant Street' has got locals worried

You thought 'Benefits Street' was controversial...

Follow-up documentary 'Immigrant Street' has got locals worried
Refugee children from Central America let down by Washington's high ideals

Refugee children let down by Washington's high ideals

Democrats and Republicans refuse to set aside their differences to cope with the influx of desperate Central Americas, says Rupert Cornwell
Children's books are too white, says Laureate

Children's books are too white, says Laureate

Malorie Blackman appeals for a better ethnic mix of authors and characters and the illustrator Quentin Blake comes to the rescue
Blackest is the new black: Scientists have developed a material so dark that you can't see it...

Blackest is the new black

Scientists have developed a material so dark that you can't see it...
Matthew Barzun: America's diplomatic dude

Matthew Barzun: America's diplomatic dude

The US Ambassador to London holds 'jeans and beer' gigs at his official residence – it's all part of the job, he tells Chris Green
Meet the Quantified Selfers: From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor

Meet the 'Quantified Selfers'

From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor
Madani Younis: Five-star reviews are just the opening act for British theatre's first non-white artistic director

Five-star reviews are just the opening act for British theatre's first non-white artistic director

Madani Younis wants the neighbourhood to follow his work as closely as his audiences do
Mrs Brown and her boys: are they having a laugh?

Mrs Brown and her boys: are they having a laugh?

When it comes to national stereotyping, the Irish – among others – know it can pay to play up to outsiders' expectations, says DJ Taylor