Business Confidence in Bank Lending: R3's perspective

25 NOV 2010

R3 have published an interesting new press release on business confidence in bank lending. The release notes:

"A survey of business owners reveals that over forty percent (44%) of them believe that the banks have been broadly supportive over the last three months to September; while less than a quarter (22%) disagree with this sentiment. Out of that group, just 17% of business owners disagree ‘strongly’ that banks have been supportive.

R3 President, Steven Law commented:
"It is interesting that, despite the negative tone of much of the public debate around bank behaviour, just one in six businesses actually agree with this stance. This may suggest the presence of a vocal minority within the business community. I have seen a significant difference in the approach of the banks compared to their behaviour during the 1990s. In the last downturn, banks swiftly removed facilities; this time around they are working with businesses - granting holidays on loan payments and extending loan periods."

In terms of creditor support, over a third (34%) of business owners believe that HMRC has been broadly supportive over the last three months; and thirty percent of businesses believe that trade creditors have been broadly supportive.

Steven Law continued:
"Creditor behaviour has a significant impact on business survival and insolvency trends and this has certainly played a key role in stemming the tide of insolvencies. We've seen historically low interest rates keeping the cost of servicing debts relatively low; and HMRC's tax-deferral schemes allowing businesses breathing space to pay their taxes.

"Businesses have generally benefitted from supportive creditors so far, but this approach may not continue. As conditions change, so may the approach of major creditors, so it is vital that financially vulnerable businesses seek financial advice sooner rather than later."

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