Specialist finance firms
are today’s best lenders, writes George Ashworth, Aldermore head of
asset finance.
Go deeper with GlobalData
Barclays’
decision to no longer provide asset finance support to firms with a
turnover of less than £5m (€6m) will have come as a bitter blow to
SMEs across the country, especially those who thought they could
rely on the bank with whom they have built a long and productive
relationship.
The story came to light in
The Times (14 February), which featured a Barclays
customer of 29 years, Ian Lewis.
In a subsequent blog
published on The Times website, Mr Lewis explained: “We
did not get so far as discussing any terms, any financial figures,
or how my business had performed financially over the last 3
years… The whole conversation lasted no more than a couple of
minutes.
“The relationship manager was
not turning our company down because we did not fit their risk
reward requirements, he was simply unable to provide a quotation
because he was stating the new corporate policy.”
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By GlobalDataMr Lewis went on to plead on
behalf of SMEs: “Please judge us individually on our merits and not
our size. SME businesses are no small deal to the UK economy; we
make up over 70% of the overall UK GDP and jobs market. Any long
term and sustainable recovery in the UK economy will not rest only
with the health of the big boys in the FTSE, but with us smaller
companies as well.”
I couldn’t have put it better
myself.
As shocking as it is that
this development came to light at the same time the government is
encouraging big banks to provide greater support to SMEs, it also
highlights an issue of perhaps even greater significance: the era
of traditional relationship banking is coming to an end.
Most business managers I talk
to believe that a long-term relationship with their primary
relationship bank is something to be nurtured and developed. They
believe that maintaining a well-conducted account will support
future applications for additional funding. But, as Mr Lewis’s case
demonstrates only too clearly, that is no longer the
case.
We are now in an era where
SMEs should not think of their bank as a one stop shop, but simply
as the provider of transactional and overdraft
facilities.
If they are seeking funding
for other purposes, such as the acquisition of assets, commercial
property, invoice finance or loans for an MBO or acquisition, then
they should approach specialist finance firms who will not only be
happy to consider their application but could also offer a more
tailored solution.
Banking has now moved into an
era in which ‘horses for courses’ is the most appropriate
approach.
SMEs may be disappointed by
Barclays’ decision, but they should not feel downhearted. Finance
is available, but not necessarily from just one
organisation.
Applying for additional finance is no different to buying
new tyres or an exhaust for our cars – very few of us go back to
the garage from which we originally purchased our
vehicles.
