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.

News
people'It can last and it's terrifying'
Sport
Alexis Sanchez, Radamel Falcao, Diego Costa and Mario Balotelli
football
Sport
Danny Welbeck's Manchester United future is in doubt
footballGunners confirm signing from Manchester United
News
people Emma Watson addresses celebrity nude photo leak
PROMOTED VIDEO
Sport
footballFeaturing Bart Simpson
News
Katie Hopkins appearing on 'This Morning' after she purposefully put on 4 stone.
peopleKatie Hopkins breaks down in tears over weight gain challenge
News
i100
Arts and Entertainment
Olivia Colman topped the list of the 30 most influential females in broadcasting
tv
News
Kelly Brook
peopleA spokesperson said the support group was 'extremely disappointed'
Life and Style
techIf those brochure kitchens look a little too perfect to be true, well, that’s probably because they are
News
ebooksAn unforgettable anthology of contemporary reportage
Sport
Andy Murray celebrates a shot while playing Jo-Wilfried Tsonga
TennisWin sets up blockbuster US Open quarter-final against Djokovic
Arts and Entertainment
Hare’s a riddle: Kit Williams with the treasure linked to Masquerade
booksRiddling trilogy could net you $3m
Arts and Entertainment
Alex Kapranos of Franz Ferdinand performs live
music Pro-independence show to take place four days before vote
News
news Video - hailed as 'most original' since Benedict Cumberbatch's
News
i100
Latest stories from i100
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

Infrastructure Lead, (Trading, VCE, Converged, Hyper V)

£600 - £900 per day: Harrington Starr: Infrastructure Lead, (Trading infrastru...

Planning Manager (Training, Learning and Development) - London

£35000 - £38000 per annum + benefits: Ashdown Group: A highly successful, glob...

Business Anaylst

£60000 - £75000 per annum + BONUS + BENEFITS: Harrington Starr: Business Anal...

SQL Implementation Consultant (VB,C#, SQL, Java, Eclipse, integ

£40000 - £50000 per annum + benefits+bonus+package: Harrington Starr: SQL Impl...

Day In a Page

'I’ll tell you what I would not serve - lamb and potatoes': US ambassador hits out at stodgy British food served at diplomatic dinners

'I’ll tell you what I would not serve - lamb and potatoes'

US ambassador hits out at stodgy British food
Radio Times female powerlist: A 'revolution' in TV gender roles

A 'revolution' in TV gender roles

Inside the Radio Times female powerlist
Endgame: James Frey's literary treasure hunt

James Frey's literary treasure hunt

Riddling trilogy could net you $3m
Fitbit: Because the tingle feels so good

Fitbit: Because the tingle feels so good

What David Sedaris learnt about the world from his fitness tracker
Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Second-holiest site in Islam attracts millions of pilgrims each year
Alexander Fury: The designer names to look for at fashion week this season

The big names to look for this fashion week

This week, designers begin to show their spring 2015 collections in New York
Will Self: 'I like Orwell's writing as much as the next talented mediocrity'

'I like Orwell's writing as much as the next talented mediocrity'

Will Self takes aim at Orwell's rules for writing plain English
Meet Afghanistan's middle-class paint-ballers

Meet Afghanistan's middle-class paint-ballers

Toy guns proving a popular diversion in a country flooded with the real thing
Al Pacino wows Venice

Al Pacino wows Venice

Ham among the brilliance as actor premieres two films at festival
Neil Lawson Baker interview: ‘I’ve gained so much from art. It’s only right to give something back’.

Neil Lawson Baker interview

‘I’ve gained so much from art. It’s only right to give something back’.
The other Mugabe who is lining up for the Zimbabwean presidency

The other Mugabe who is lining up for the Zimbabwean presidency

Wife of President Robert Mugabe appears to have her sights set on succeeding her husband
The model of a gadget launch: Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed

The model for a gadget launch

Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed
Alice Roberts: She's done pretty well, for a boffin without a beard

She's done pretty well, for a boffin without a beard

Alice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
Get well soon, Joan Rivers - an inspiration, whether she likes it or not

Get well soon, Joan Rivers

She is awful. But she's also wonderful, not in spite of but because of the fact she's forever saying appalling things, argues Ellen E Jones
Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

A fresh take on an old foe

Doctor Who Into the Dalek more than compensated for last week's nonsensical offering