FSB slams ‘arm and a leg’ bank charges
Federation claims harsh lending policies are hampering economic recovery
The Federation of Small Businesses (FSB) has hit out at the “arm and a leg” charges being imposed by Britain’s banks.
Following the release of new figures from the Bank of England earlier this week, which showed that small firms are often paying twice as much interest on their loans as bigger companies, the FSB warns that the banks’ lending strategy is harming the UK recovery.
A spokesperson for the Federation said: “Lots of businesses are not going to banks because they are charging an arm and a leg or asking for collateral on a small loan, so they (the entrepreneurs) are dipping into savings, using personal credit cards or turning to family and friends.
“Businesses are beginning to look at their future but are not overly confident in the prospects of the economy or their business, and difficulties in accessing finance are adding to this.”
In response, the British Bankers’ Association (BBA) – which last week released its own figures showing a drop in business lending – blamed the current impasse on weak trading activity.
A BBA spokesman said: “Banks are willing to lend to viable businesses and are committed to supporting their business customers. The level of interest charged is a commercial matter for individual banks, but is based on risk involved and the cost of funds to the bank.”