90 percent of UK businesses believe the government needs to step
up its efforts to encourage banks to lower the overall cost of
lending, a new survey has revealed.

The survey, conducted by Syscap, the independent IT finance
provider, showed that 90 percent of businesses believe that loan
arrangement fees are excessive, an even higher percentage than the
75 percent who feel that the lending margins banks are charging on
loans are too high.

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“It will surprise many that businesses are more concerned about
the arrangement fees banks are charging than they are about the
margins on loans,” said Philip White, chief executive of
Syscap.

According to White, banks have already admitted to the Bank of
England that they have been charging their customers even higher
arrangement fees.

The size of those arrangement fees often bears little relation
to the size of the loan, and therefore smaller companies can pay
much higher arrangement fees as a percentage of the amount they
borrow than larger companies, White added.

Syscap’s research also showed that just 3 percent of businesses
believe that their ability to access bank lending has improved over
the past year, whilst 38 percent feel that it is now more difficult
to secure bank funding than it was 12 months ago.

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“This research shows there are still serious problems
surrounding the funding of UK businesses. Whilst banks argue that
the low level of lending is because there is less demand for funds,
businesses are saying that the high cost of loans is what has
depressed demand,” White said.

Jason T Hesse