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Why can’t business access finance?
The Independent External Reviewer has published his first report on the effectiveness of the SME appeals process operated by the UK banks.
The report contains statistics about finance application successes and failures and reviews the operation of the appeals process. The report covers the period 1 April 2011 to 31 March 2012.
It provides an interesting read to anyone involved in raising finance for businesses as it highlights the importance of a good credit score, planning and affordability. It also shows that, despite the current low take up an appeal should be considered if the application is turned down.
Some of the interesting findings are:
- 114,000 applications were declined;
- in the first year of the process there have been 2177 appeals;
- of those declined, 2% were taken to appeal;
- four in 10 appeals overturned an original decline decision in favour of the customer.
Section five of the report provides a number of useful insights for businesses and advisers looking at current finance applications. The report considers appeals based on the size of a business, where it is located, its business sector, the type of finance that was applied and if they are new or existing customers of the bank. It then reviews cases taken to appeal and highlights the reasons for the ‘original decline decision’. Unsurprisingly, affordability and a failed credit score are the main reasons for declining finance. They account for 65% of the original decline decisions and are the key drivers for banks when making lending decisions.
You can see the report and its interesting findings here.
To help you with your planning, look at the business finance four part journey which explains all you need to know about business lending. The journey is backed up by free resources you can take away and use. It can be found here.