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Extracts from this article appeared in the York Press on Monday, October 19, 2009

Relationship Between Banks and SMEs must be Nurtured

Jeremy Oliver, Director

The relationship between banks and their small-to-medium-sized business clients must be nurtured if the economic recovery is to gather pace, according to leading Yorkshire accountants Garbutt & Elliott

The comments come in the wake of the SME Access To Finance Research Report, recently published by the Institute of Chartered Accountants in England and Wales. The report revealed that some SMEs are still finding it difficult to borrow money from their banks.

Jeremy Oliver of Garbutt & Elliott said: “This is a timely report. We at Garbutt & Elliott have an excellent relationship with banks and understand the pressure they are under. We believe that it is crucial that their relationship with their SME clients is positive.”

He said: “In the report opinions vary as to the severity of the situation. It is our task to bring banks and businesses together and improve their relationships. If the green shoots of economic recovery are going to flourish, then this relationship must be nurtured.”

The report revealed that SMEs in construction and property, and to a lesser extent those in retail, are seen to be hardest hit. It explained that demand for credit had been pushed up by reduced SME turnover, as a result of generally poor economic conditions. Before September 2008, the relationships between SMEs and their banks were fairly healthy. Since then, they had become more difficult.

This reflected the impact of reduced residential and commercial property values for assets held as security and an increased risk profile for businesses generally, due to the recession. Banks were now beginning to call SMEs on breaches to lending conditions much more frequently and with more severe consequences.

Mr Oliver said: “It is crucial to improve this relationship and accountants such as ourselves can play a very important intermediary role. We continue to run Access to Finance workshops where attendees receive Access to Finance fact sheets showing the eligibility criteria for different sources of finance with the next events taking place on Wednesday 11 November 2009 and Wednesday 9 December. Any businesses interested in attending should contact Rebecca Green on 01904 464100.