How the Bank Governor found time to ease van man's frustration over loan refusal
Wednesday 06 March 2013
Mike Benson thought, as the owner of a profitable small business, a £10,000 loan for a new Ford Transit van wouldn’t be too much to ask.
But when the Worcestershire-based firm was denied a loan from the Bank of Scotland and instead given a “patronising” offer of counselling, the 65-year-old vented his fury in a letter to Bank of England governor Sir Mervyn King earlier this year.
To his surprise, Sir Mervyn replied on January 17, signalling to the owner of the air compressor parts firm that he was fed up of banks denying loans to viable enterprises.
“I was surprised and delighted when I got the letter that a person in his position had bothered to write to someone in my position,” Mr Benson said.
Sir Mervyn wrote: “I was sorry to read of the difficulty you have had in trying to replace your transit van. I can fully understand how maddening that, and the behaviour you describe from the banks you have spoken to, must have been.”
He suggested Mr Benson try one of the new banks operating in the UK, such as Swedish firm Handelsbank.
Mr Benson, who said his company turned over £650,000 last year, said: “We’ve been banking with them since 2006. They look at fixed assets, and we don’t have many of those – not the stuff you can turn into large amounts of money.” He’d been looking for a new van after one of his four employees ran an ageing vehicle through a “bloody great” puddle, and eventually purchased one with his own cash.
In the rejection letter, the bank also offered a free business mentor, which the 65-year-old found “patronising”. “It’s a stupidity that has an impact on us as a small business,” he said.
However, the bank did offer a number of other options to help Mr Benson fund the purchase of the van, and a Lloyds Banking Group spokesperson said: “We approve eight out of ten SME loan applications. On a case by case basis, there can be circumstances when we ask for security for a loan through a personal guarantee and we do our best to make this clear to our customers. We do also offer our customers alternative forms of finance and the opportunity to appeal loan application decisions.”
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