- Tower Hamlets
Businesses in east and south London are divided over the government plans to invest one billion pounds in a ‘business bank’ for small and medium enterprise loans.
EastLondonLines contacted local firms about whether the proposals address the problems they face and how crucial loans are to their survival.
Business secretary Vince Cable announced the so-called ‘business bank’ at the Liberal Democrat party conference on Monday, saying it could break the credit freeze at major banks and get money flowing to small enterprises.
Judy Riley, of Nick Bell Design in Haggerston, said: “It is very, very difficult for a small business to start up or get any kind of lending unless they have had a really successful year.
If there is some kind of pot of money where a small business can go to, to borrow money, without going to the bank – which is basically boxes needing ticking – then that would help.
Bespoke furniture designer and manufacturer Karl Rees is in early stages in his business and yet to require external investment.
He told EastLondonLines that access to loans will prove essential to deal with the high cost of machinery and of renting in Hackney.
He said: “I think we need to follow example of Germany where the economy is based more on small a medium sized businesses – they have better access to loans and advice from local banks rather the way in this country where business is faceless and you have to conduct it over the phone.
“Better help from local business managers at your local bank would be more helpful.”
But Trevor Reeves, director of Croydon’s House of Reeves, which was grievously damaged in last year’s riots, voiced disappointment that the government was not bringing mainstream banks to book after the bailouts of 2008.
He said: “I think it’s clear that the money they put into the banks over the last 2 or 3 years wasn’t done correctly if they have to set up their own bank. Either it wasn’t thought out as much as it should have been, or they haven’t got the control of the publically-owned banks that they should have.”
“The banks are supposed to be lending – they’ve blatantly ignored the government, so the government are saying, oh, terribly sorry, we’ll set up our own bank. It’s blatant capitulation, really. Who’s controlling who?”
Reeves said the plan would not help his shop because it had no plans to expand and a good relationship with its bank.
He said: “Given what we’ve been through over the last few years, it’s not really at the forefront of our lives! We’re just trying to stay on your feet.”
Geoff Moss, who runs the web design and consultancy firm Four to the 4 in New Cross, said that while access to finance is a pressing concern, but information and other practical help is also crucial.
He said: “Advice is always important for people, but sometimes its about access to funding and investments. Very often there are attempts to help businesses financially and very often businesses simply aren’t in direct contact with the people who can inform them on how to go about that.
“Its not just having the revenue in place, its about having the connections to small businesses so they are actually given a helping hand securing it.”
The full details of the plan have not yet been released, but its aim is to help SMEs expand by providing easier access to loans which commercial banking system – which Cable called “broken” – will not provide.
Cable, said: “For decades, British industry has lacked the sort of diverse, long-term finance that is quite normal elsewhere. We need a British business bank with a clean balance sheet and a mandate to expand lending rapidly and we are now going to get it. “