Small Talk: Blame game erupts over the fall in loans to small businesses

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Someone is telling porkies. They have to be. Small companies, the banks and the politicians are all saying different things on small business lending. Pretty much every small business under the sun lists its number one complaint (the list is often much longer) as being starved of credit by the big nasty banks, especially the state-owned ones. To help stymie the criticism the banks yesterday announced a "taskforce" to examine the issue (see left).

The Business Secretary, Vince Cable, and the Chancellor, George Osborne, are in broad agreement, saying that they are in "dialogue with the deaf" when it comes to telling the banks – and in the case of Royal Bank of Scotland and Lloyds Banking Group, banks we all own – to start writing business loans. Mr Osborne's predecessor, Alistair Darling, told RBS, of which we own 84 per cent, to lend £50bn to small companies, threatening to do some good old fashioned banker bashing if they did not.

"Oh, but they don't want to borrow!" say the banks. RBS, which published results on Friday, reckons it has spent millions putting a new SME lending platform in place, and on Friday said that it had written £23.5bn on new loans in the first six months of the year, with the majority (£14.4bn) going to smaller companies. It stressed that applications for business loans have fallen by 7 per cent in the last three months, and that £45m worth of corporate overdrafts have not been used.

It's more complicated than that, say organisations like the Federation of Small Businesses, which claims that the reason small firms are not taking up the offer from RBS and the others is that the terms are prohibitive. A constant complaint is those wishing to extend loans are told to pay huge increases in rates, even if there is no record of credit problems.

In cases of the very smallest companies, company bosses are being asked to put up large amounts of collateral, sometimes even their own homes, the FSB says. RBS, for its part, says that it hears horror stories but that most of its lending to SMEs is done at 4 per cent or less. The bank refused to be drawn on how many loans were extended at this rate, but it is thought to be as high as 90 per cent of their loans.

According to Aldermore, a bank set up specifically to lend to small companies, 496 complaints were made to the Financial Ombudsman by small businesses about their bank loans or overdrafts in the 12 months to the end of March, compared to 226 complaints in the previous 12 months, a 119 per cent increase. Phillip Monks, the chief executive of Aldermore, said: "Small businesses that we talk to actually feel betrayed when their business is running fine but the bank still decides they are not going to renew their loan facility."

Mr Monks refuses to say how many small business loan applications Aldermore rejects.

Statistics can be manipulated

League tables, of course, can be spliced and diced in whichever way an adviser wants them to look, and if any service provider is pitching to a small company, and its main argument is that it is proudly atop a league table, the small group in question should be hearing alarm bells going off.

Nonetheless, everyone takes notice of these regular pieces of analysis, and one of the more respected is Hemscott's quarterly league setup, published in conjunction with the law firm Fasken Martineau.

Issued last week, the rankings show that Seymour Pierce is the Barcelona of the AIM Nomads (it is top of the pile in the UK, but we could bring ourselves to compare it with Premiership champions Chelsea), with a total of 86 clients.

The firm leads the pack, despite losing three clients in the last three months, the survey showed.

Second-placed Arbuthnot Securities added two clients to move its total to 65, and third-placed Cenkos Securities holds steady with 57. In the AIM 100 market, Evolution Securities secures two new clients, moving its total tally to 10, and becoming the first Nomad to enter double-digit client figures this year.

Contract research firm buys US rival

Friday was a red-letter day for Cyprotex, a biotech company listed on the Alternative Investment Market, when the Cheshire-based group announced it was buying a US rival called Apredica. Cyprotex is a so-called "contract research organisation" (CRO), which means that it specialises in tests of drugs for big pharma, to produce data on things like the rate at which a compound is absorbed into the human body. The specific practice is known as absorption, distribution, metabolism, excretion and toxicology, or ADMET.

With a few notable exceptions, the biggest pharmaceutical groups are all from the US, and they can often be a little bit stuffy about sending their highly prized compounds overseas. As such, Cyprotex set its sights this year on making an American acquisition, as well as breaking into the lucrative toxicology market, both of which have been achieved with the Apredica deal.

The British company will spend £2.68m on the transaction, with £1m coming from cash reserves, and the rest in shares.

"The acquisition of Apredica is highly significant for Cyprotex as it creates, at a single stroke, a transcontinental ADMET services business," said Cyprotex's chief executive, Anthony Baxter.

"We believe the acquisition is revenue and earnings enhancing and highly valuable to our shareholders. Apredica is a well-respected US-based operator in the ADMET or contract research arena. The combination of businesses offers our customers, both existing and new, a greatly enhanced ADMET offering and scientific consulting service in this vital area of drug discovery services."

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