Small businesses now have an option to appeal decisions that turned them down for loan applications thanks to a new system introduced by the Banks. The British Bankers’ Association (BBA) has said the new process is one of many new initiatives introduced by the industry.
A senior bank employee will now hear an appeal from a small business if they choose in order to have their application reconsidered even though the initiative was received with scepticism by small business groups.
The head of the BBA Angela Knight said they were trying to figure out the commitment of the industry to see how to deal with small business. Businesses want a senior person to review the application if they are denied and they want to be able to have a talk about why they were denied.
The Federation of Small Businesses (FSB) through their head of policy Andrew Cave do not think much change will take place in the practice since the banks are the ones holding all the cards. This new system only includes businesses that have fewer than 10 employees and with an annual turnover of less than £25m.
In an agreement named Project Merlin with the government, over £10b more is expected to be loaned this year from last year or a total of about £76bn to small business, but small business still remain adamant that they are not receiving enough lending.
Recent research by the FSB says that 16% of small businesses wanted to borrow money and close to 40% of those same had been turned down, even though banks have said the levels are low since businesses do not want to borrow.