Banks must do more to restore trust with business
To get the full picture of what companies think about the current climate for accessing external finance, the Chamber network undertook a survey of Chamber members in mid September. The results show that although banks and building societies are the main source of finance for firms, half of businesses lack trust in these financial institutions.
At the Chamber, we continue to hear from businesses about their concerns over accessing the finance they need to grow. Over the last year, these concerns have coalesced around the core issues of trust in, and relationships with financial institutions and the transparency of the products offered to businesses.
So to get the full picture of what companies think, we undertook a survey of Chamber members in mid September. The results, comprising responses from 1,560 businesses across the UK, show that although banks and building societies are the main source of finance for firms, half of businesses lack trust in these financial institutions. Over a third of respondents said that they trust financial institutions less than they did a year ago, and almost four in ten are not confident in securing finance. Although these are UK statistics they very much reflect the opinion of our Norfolk members
Only 57 per cent of respondents felt confident that they could secure external finance, and over a third (37 per cent) were not. When asked about government-backed finance schemes, 43 per cent of businesses had not heard of any of them, with younger businesses and micro firms more likely to be unaware of them. However 59 per cent of firms said a government-backed business bank would make them more confident about accessing finance.
The Chamber welcomed the commitment from government in late September 2012 to create a British business bank. It is the Chamber’s firm belief that only a state-backed business bank can play both a pro-cyclical and counter-cyclical role to encourage access to finance. But beyond the model outlined by government, this new institution will need the infrastructure to make its own decisions on loans, and its own channels to deliver funds to growing businesses.