In the Daily Telegraph on Tuesday, the Telegraph Business Club Editor James Hurley reported on a move by some of the major banks to have the creditworthiness of their business customers independently profiled in an attempt to defuse the row over small businesses' access to finance.
Now I'm generally supportive of banks. I don't want them to lend money to businesses that aren't creditworthy (that is, after all, how we got into this mess in the first place), and I understand the obvious dilemma of being under pressure to repair balance sheets AND lend to small businesses.
This though is disingenuous. Historically, the ICM has always fought against the raising of thresholds for modified accounts. But we all know that most small businesses file modified, abbreviated, or unaudited accounts as it is. Indeed some of them fail to file any form of accounts at all, so the outcome of this exercise is inevitable. The businesses banks won't lend to have poor credit ratings so their decisions can be easily justified!
What would be far more beneficial is if the banks spent time and energy in helping to educate and encourage small businesses to provide management accounts more readily so that more genuine, better informed decisions can be made. Transparency will, of course, be essential, and honesty on both sides would be welcome.
As I told the Daily Telegraph, I'd rather the banks were campaigning for provision of information rather than embarking on what to me seems a pointless and futile exercise.
If you'd like to read the full article click: http://www.telegraph.co.uk/finance/yourbusiness/8000675/Report-on-bank-small-business-lending-decisions-a-pointless-exercise.html
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