Credit still not forthcoming from bailed-out banks
SMALL firms are struggling to secure the finance they need because banks are withholding loans guaranteed by government schemes, it is claimed.
Loans of up to 1m should be available to smaller businesses under initiatives like the Enterprise Guarantee Scheme (EGS), which sees the government underwrite 75 per cent of the cash.
But small firms are being knocked back for credit by recession-hit banks which are still nervous about parting with the money.
And the situation may not ease any time soon as the banks that have already been bailed out with billions of taxpayers' money are expected to be ordered to hold larger amounts of capital.
At the Wakefield first Friday meeting last week, Richard Coulson, director of Complete Office Solutions in Ossett, said a bank had only offered him finance in return for 20 per cent of the firm's equity.
He raised the issue with a question-and-answer panel, including chief secretary to the treasury, Yvette Cooper, chief executive of Wakefield first, Mohan De Silva, and council leader Peter Box.
Mr Coulson asked: "What is being done about this particular issue? We will never come out of this situation until bank funding is back where it was."
His business was still profitable and was not in a troubled sector.
But he felt banks were protecting their profit margins by withholding the cash.
Mr Coulson said: "They are taking the opportunity to take equity in a business that is going to pay off for them."
Yvette Cooper said 14m had already been offered through the EFG scheme so far, but admitted some firms had not had the help they needed.
Coun Box hoped bailed-out banks would provide more support.
He said: "It would be helpful if some of the banks remembered where they were getting the money from that saved them in the first place."
Tom Riordon, chief executive of Yorkshire Forward, and John Collier, director of Business Link Yorkshire, were also on the panel at the Cedar Court Hotel, on Denby Dale Road, last Friday.
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Weather for Wakefield
Wednesday 23 May 2012
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