Sources of finance for SMEs - Banks Squeezing the Life out of Businesses

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A timely and hugely relevant article in the Guardian today about how Britain’s banks are squeezing the life out of the UK’s small business sector…

The article makes pretty despressing reading.  If you can restrain your anger at how the banks (now partly owned by us - the taxpayer) are acting like petulant toddlers, the article contains some gold-standard study material for AQA Unit 1 and Edexcel Unit 1.  Excellent examples of:

- Risk (as perceived by the banks)
- The problems start-ups have obtaining bank loans
- The high rate of interest charged on bank overdrafts (well in excess of the Base Rate)
- How the depreciation of the Pound has increased the costs of businesses that buy goods and services from overseas (e.g. hotel rates for the golf operator)

I’m still left with a nasty feeling about the behaviour of the banks.  2009 is shaping up to be a dreadful year for the small business sector, and despite their crocodile tears, the business banking sector is showing little, if any, support for SMEs.  Shame on them.

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