Research from the Forum of Private Business indicates that the relationship between small businesses and banks needs to improve. The members of the FPB are calling for the Business Finance Taskforce of the British Bankers’ Association to increase performance towards link building between the two, in order to boost economic growth. The taskforce was created purely for this purpose.
Out of the businesses which are on the finance and cash flow panel of the FPB, almost 25 percent want to see more choice of ‘traditional’ services from banks, which will include the provision of business loans. Other forms of business funding are a priority for 21 percent of respondents, to boost competition in the finance market and reduce the reliance of small businesses on bank funding. Slightly more than a quarter of businesses questioned were actively seeking other financial arrangements other than the bank, with most looking at alternatives to the key high street financial institutions.
The main banks would only be approached by seven percent of businesses, which shows just how bad the situation has become between the banks and businesses. According to Alex Jackman, the senior policy advisor for FPB, 18 recommendations have been put forward by the Business Finance Taskforce, with some of those being useful. He adds:
“But the verdict so far is that much more needs to be done to get cost-effective finance to the businesses that need it most.”
Although demand for finance from banks is dropping rapidly, it doesn’t mean that the requirement for affordable business funding isn’t apparent.
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