Brighton & Hove Business Forum
8-11 Pavilion Buildings, Brighton, BN1 1EE
Tel: 01273 735442
© Brighton & Hove
News - 8 June 2011
|Phil Orford, CEO, FPB|
Banks and businesses need to bury the hatchet
The head of a leading business group has urged banks and businesses to find common ground in order to stimulate lending and rebuild the economy.
Phil Orford, Chief Executive of the Forum of Private Business, made his comments while addressing the Better Business Finance event in Manchester – a conference designed to bring both sides together in order to tackle the issues surrounding bank lending to businesses.
Mr Orford, who was the event’s keynote speaker, said that the time for “bashing and blaming” had passed.
Instead, he told the bank representatives, business leaders and company owners present that the time had come to move on, acknowledge failings on both sides and find common ground in order to stimulate economic growth.
Mr Orford said: “Surely the time has come to acknowledge the issues and to find ways to move forward, constructively and collaboratively.
“Forget the bashing and the blaming. We are talking about enabling or disabling our recovery – it’s now that serious. Businesses and the banks need to take a critical inward look and accept that the days of easy credit have gone.”
Highlighting the requirement for business owners to think objectively about how they appear to potential lenders, Mr Orford urged small firms to implement a range of measures in order to improve their creditworthiness.
These measures included offering assets as security, methodically preparing business plans and managing both business and personal credit ratings.
Mr Orford also spoke of his own experiences of being repeatedly turned down for bank lending when attempting to establish a business in the early 1980s, and drew parallels between his experiences and the experiences of many small firms over the past few years.
Mr Orford also told the banks that, due to their vast resources and infrastructure, they had a duty to reach out to small businesses and guide them through the process.
He said, “You deal with most if not all small businesses. You have access to them and communication with them - at your fingertips. You have the resources to make a difference. The smallest businesses do not.”
Mr Orford also urged the banks to put a halt to the closure of local branches, telling the assembled industry leaders: “Many communities continue to experience branch closures – even when the branch is the last bank in town.
“This disenfranchises businesses from the major retail banks for business transactions and relationships, especially in rural areas. If the banks are committed to serving businesses and their local communities, this closure strategy must come to an end.”
Additionally, Mr Orford called on the banks to improve what they offer to businesses and speed up efforts to produce a viable alternative to cheques. He said: “We need to see new products for business that are relevant for our time.
“Flexible products – maybe even bundled products – which allow borrowers to switch around for use at the appropriate time. Technological advances must enable faster process at reduced cost to business – particularly for the smallest - and I would cite faster payments as an example.
“And what about the removal of the cheque – when will we see the retail banks testing and implementing alternative payment methods, many of which will be vital for small firms?”
The Forum has been campaigning to increase the flow of credit to smaller businesses ever since the financial crisis and has repeatedly urged the banks to restore localised lending decisions in order to make credit assessments fairer and more accurate.
The not-for-profit organisation also helps its members become more finance-ready and improve their credit ratings as part of a wide range of support services.
Read related items on:
Legal and financial services
Forum of Private Business