Banks in dark on loan guarantee, say firms

Government ministers set up the financial aid package – which guarantees that banks will regain three-quarters of the
money they lend to a company if it goes bust – last month as part of a
series of measures to help firms get finance.

But yesterday the FSB said its members had found that many bank workers did not know how the flagship scheme worked.

Mackinnon, spokesman for the FSB said: “We are hearing anecdotal
evidence that people are going into their banks and in their branches,
managers don’t have any knowledge of the scheme or even when it’s going
to come in.

“Some small businesses have been really disappointed
in recent months with how their relationship with their bank manager
has broken down. At this time, it’s more important than ever that firms
get access to as much funding as possible.”

Banks yesterday said they were in the process of briefing their staff on the scheme.

McCulloch, spokesman for Clydesdale, said: “It is a relatively new
initiative, but we do have a communications programme to ensure that
bank staff are familiar with schemes like this.”

The FSB claim
came after a newspaper reported yesterday that loans of only about £12
million had been issued under the scheme, which was launched by the
Department for Business, Enterprise and Regulatory Reform on 14
January. It was claimed that Barclays alone had issued about £12m of
loans, while Royal Bank of Scotland was “processing applications” but
refused to say if it had sanctioned any loans.

Some banks yesterday said they had issued loans through the scheme, but refused to put a figure on their value.

Others said they were processing applications and expected to increase loans to SMEs over the coming months.

TSB said yesterday that while it had been one of the first banks to use
the scheme, its relatively strong financial position meant it did not
need the government guarantee for as high a proportion of its loans as
other institutions.

Bank of Scotland said it had not yet
processed any applications under the loan scheme amid the takeover by
Lloyds TSB – but pledged it was putting the finishing touches to the
product and expected to roll it out next month.

Clydesdale said it had received a high number of applications of which “some” had been approved.

scheme, which is restricted to companies with a turnover of up to £25m,
guarantees bank loans for amounts between £1,000 and £1m, paying the
bank 75 per cent of the loan if the company defaults and is unable to
make its repayments.