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.

Start your day with The Independent, sign up for daily news emails
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

Where the spooks get their coffee fix: The busiest Starbucks in the US is also the most secretive

The secret CIA Starbucks

The coffee shop is deep inside the agency's forested Virginia compound
Revealed: How the Establishment closed ranks over fallout from Loch Ness Monster 'sighting'

How the Establishment closed ranks over fallout from Nessie 'sighting'

The Natural History Museum's chief scientist was dismissed for declaring he had found the monster
One million Britons using food banks, according to Trussell Trust

One million Britons using food banks

Huge surge in number of families dependent on emergency food aid
Excavation at Italian cafe to fix rising damp unearths 2,500 years of history in 3,000 amazing objects

2,500 years of history in 3,000 amazing objects

Excavation at Italian cafe to fix rising damp unearths trove
The Hubble Space Telescope's amazing journey, 25 years on

The Hubble Space Telescope's amazing journey 25 years on

The space telescope was seen as a costly flop on its first release
Did Conservative peer Lord Ashcroft quit the House of Lords to become a non-dom?

Did Lord Ashcroft quit the House of Lords to become a non-dom?

A document seen by The Independent shows that a week after he resigned from the Lords he sold 350,000 shares in an American company - netting him $11.2m
Apple's ethnic emojis are being used to make racist comments on social media

Ethnic emojis used in racist comments

They were intended to promote harmony, but have achieved the opposite
Sir Kenneth Branagh interview: 'My bones are in the theatre'

Sir Kenneth Branagh: 'My bones are in the theatre'

The actor-turned-director’s new company will stage five plays from October – including works by Shakespeare and John Osborne
The sloth is now the face (and furry body) of three big advertising campaigns

The sloth is the face of three ad campaigns

Priya Elan discovers why slow and sleepy wins the race for brands in need of a new image
How to run a restaurant: As two newbies discovered, there's more to it than good food

How to run a restaurant

As two newbies discovered, there's more to it than good food
Record Store Day: Remembering an era when buying and selling discs were labours of love

Record Store Day: The vinyl countdown

For Lois Pryce, working in a record shop was a dream job - until the bean counters ruined it
Usher, Mary J Blige and to give free concert as part of the Global Poverty Project

Mary J Blige and to give free concert

The concert in Washington is part of the Global Citizen project, which aims to encourage young people to donate to charity
10 best tote bags

Accessorise with a stylish shopper this spring: 10 best tote bags

We find carriers with room for all your essentials (and a bit more)
Paul Scholes column: I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England

Paul Scholes column

I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England
Jessica Ennis-Hill: 'I just want to give it my best shot'

Jessica Ennis-Hill: 'I just want to give it my best shot'

The heptathlete has gone from the toast of the nation to being a sleep-deprived mum - but she’s ready to compete again. She just doesn't know how well she'll do...