Banks are willing to do business and want to lend to small firms

The economic recovery has still not changed a common misconception over the availability of finance to fund new businesses and company expansion, an industry leader is warning.

Matthew Fell, the Confederation of British Industry director for competitive markets, said his experience shows banks and other institutions are very much open to lending when presented with a good business plan.

But many people have been wrongly discouraged from approaching banks because of the belief they will not lend.

Mr Fell is responsible for leading the CBI’s work on markets in the public and private sectors, making sure they are vibrant. This includes ensuring firms can access the finance they need to invest.

He said: “Things are very different to even just five years ago.

“Don’t be put off by what seems to be quite a common public perception that banks are not open to lending.

“Politicians don’t always do us any favours here, and this has led to a belief that banks are not keen to lend.

“This is not our experience at all, and if you have a good idea, and a good business plan, there are people out there who are very keen to lend, including banks.”

He said for businesses looking for funding to expand, and even more so for new start-ups, accessing finance can be the most daunting process, meaning it is vital to seek guidance.

With the right planning and support it can lead to new contacts who can help a business flourish.

“It is essential to make sure you have a good business plan. Don’t go looking for finance too early.

“Take the time first to make sure you have a good analysis of who your customers are and when you expect to start seeing a return. Do all of that before thinking about sourcing the finance.

“My first port of call would probably be to an accountant who can tell you if your business plan is in good shape and if it can be invested in. An accountant can also help identify the most appropriate source of finance.

Banks do the lion’s share of lending but it is worth looking at other avenues to go with this, such as investors.

“Sourcing the finance is a huge step to take and that is why it is so important to take the time to get professional advice.

“Having a good network of local contacts who can offer advice and tell you who to talk to is very important.”

Banks such as RBS have relationship managers based across the region, who are aware of any peculiarities in the local market and who can offer support suited to both new businesses and existing ones looking to access finance to help them reach the next level.

Being based locally, they also have access to a wealth of contacts who can offer help and guidance.

• RBS England & Wales is to be the future Williams & Glyn, a new bank for both personal and business customers with a particular strength in supporting SMEs.

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