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Consider the Challenger Banks
High Street Banks and Lending to SMEs
Last week, Aldermore, the so-called challenger bank, reported their profit had more than doubled in the first quarter of the year. The up-and-coming lender joined rivals Shawbrook, Virgin Money and OneSavings Bank in achieving better than expected results, fuelled by greater lending to small and medium sized enterprises.
This contrasts to the dismal news concerning the so called big five High Street lenders, where various surveys report that SMEs are becoming increasingly disgruntled with being misled, misinformed and overcharged by their bank. The Financial Ombudsman received 750 complaints from small businesses last year about bank loans, obscure charges and the sudden withdrawal of overdrafts. While the average cost of a business bank account is around £500 a year, a third of businesses polled believe their bank consistently sneak in fines and fees they do not understand.
A Central Government pledge to assist SME funding is also largely unfounded. A promised scheme that would force banks to refer unsuccessful applicants to alternative sources of funding has not been implemented. Additionally, under proposed changes in legislation, banks will be required to hold more capital against loans to small businesses and despite lobbying by the Federation of Small Businesses, the Government appears unmoved.
In order to capitalise on the emerging opportunities fuelled by a growing economic outlook and fulfil their potential, demand for funding from SMEs increased significantly during the second quarter of the year, but supply from the traditional lenders is not nearly matching this demand.
If you are a business owner or manager who is becoming increasingly disgruntled with their High Street bank and would like to find out about the alternatives that currently exist, then contact Chorus Business Advisers Ltd on 0845 8671263 or visit our website www.chorusadvisers.co.uk
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