Forum survey shows SMEs still reluctant to switch, despite continued banking concerns
Despite the ongoing concerns over access to finance, charges and calling in loans, small business owners remain reluctant to switch banks according to the latest research from national business group the Forum of Private Business.
The Forum’s banking and finance survey indicates that just over half of small businesses surveyed were content with their current banking arrangements and thought they offered good or excellent value for money, with a further third suggesting it was an average offering. However businesses did indicate that bank charges and the reduction/calling in of loans or overdrafts were harmful activities undertaken by banks, and remain a cause for concern.
16% of business surveyed also felt that difficulties in obtaining access to finance from their bank were an ongoing worry, particularly for those looking to survive or grow using external finance.
With the UK looking to enter a period of sustained and substantial economic growth, small businesses said they wanted more flexibility and less centralisation in lending (15%), greater access to finance (14%) and for banks to shoulder a greater proportion of risk (12%).
Around one in five small businesses also indicated that they would consider moving to an alternative provider for banking services, whilst 13% would consider them for some and 14% would consider them for additional finance.
However the survey did highlight that further work is needed to encourage more small firms to consider alternative finance options. A quarter of businesses surveyed said they would not consider such lending, citing cost (35%), awareness (21%) and lack of reliable advice (19%) as their main objections.
Commenting on the results of the survey, Phil Orford MBE, chief executive of the Forum of Private Business, said: “A growing economy poses its own issues for small businesses, as they decide whether to invest for expansion.
“The government, the banks, other lenders and businesses support organisations are all important enablers of growth and need to work together to ensure small businesses are getting the necessary amount of money in the right format.”
The Forum also renewed its call for government to introduce a shared branch pilot to increase competition in the business banking market.
Phil continued: “Competition is partly driven by access in the banking sector. This is increasingly limited by a reducing branch network that continues to decline. This is sometimes cited as barrier by would-be entrants to the banking market. Branch sharing can take one of two, or both, options. Inter Bank Agency Agreements facilitates use of a local bank’s counter by small business customers of other banks. Neutral Shared Branching means any branch can provide basic counter and related services, to agreed operating standards, delivered by a third party provider on behalf of participating banks.”
