B2B Payments

UK SMB, Bank Groups Spar Over Low Lending Rates

U.K. small businesses continue to struggle with access to bank funding, according to reports in Financial Times on Friday (March 30).

Small business group SME Alliance spoke to the House of Commons select committee to discuss small firms’ ongoing challenges in seeking bank loans. Traditional banks remain reluctant to lend to small firms, the group said, using their size to gain a legal advantage over SMBs that file complaints with FIs.

Reports said the SME Alliance highlighted big banks’ ability to spend money on legal teams that can delay processing of small business claims beyond the six-year statute of limitations.

“Commercial lending is still unregulated and, other than large fines, we have seen little that has changed – except perhaps the fact [that] lenders seem even more reluctant to lend and are even more keen to ensure terms of lending are onerous and biased in their favor,” the SME Alliance stated in written evidence to the committee.

The committee is seeking commentary from industry stakeholders as it probes the small business banking industry.

The remarks followed a decision by UK Finance, an industry trade association, to launch an independent investigation into the treatment of small businesses by U.K. banks.

According to Financial Times, citing data from UK Finance, small business lending in the U.K. “remained fairly static” last year, hitting $7.86 billion in new loans in the fourth quarter of 2017, an 11 percent decrease from the same period a year prior. But according to UK Finance, the downturn is linked to lower demand among small business borrowers, not to banks’ reluctance to provide financing.

As UK Finance begins its own probe, Parliament’s Treasury Select Committee continues an inquiry launched last month following revelations of RBS’ Global Restructuring Group’s mistreatment of small businesses. The Financial Conduct Authority is itself investigating that case.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.