Most SMEs are happy with their current banking arrangements, yet many are concerned about the potential negative impact their bank could have on their finances, according to a new report from the Forum of Private Business.
The FPB’s banking and finance survey revealed concerns from SMEs about the risks posed if their bank were to reduce the size of their overdraft or call in their loans; bank charges were also a cause for concern, and 16% cited a lack of access to finance and funding as a further worry.
Phil Orford MBE, chief executive of the FPB, said: “A growing economy poses its own issues for small businesses, as they decide whether to invest for expansion.
“The government, the banks, other lenders and businesses support organisations are all important enablers of growth and need to work together to ensure small businesses are getting the necessary amount of money in the right format.”
Mr Orford suggested adopting new approaches in order to enhance competition in the banking sector, allowing more new firms to enter the industry and tackling the problems caused by a diminishing branch network.
In particular, he suggested branch-sharing, in which several banks provide services via a single branch operated by a third party – so that customers of the different banks are served by the same independent employees.
Alternatively, banks may share their own branch with a competitor, so that the second bank might have a desk of its own, manned by its own employees, within a larger branch belonging to a competitor.
In either case, the idea is to make it easier for the banks to operate in locations where the local market might not be big enough to sustain separate branches, without having to absorb the overheads of doing so as a hit against their profits.