Bank Charges Crippling Businesses
Monday 21 November 2008
The amount that banks have been charging businesses in relation to interest rates is getting out of hand to the extent that the business owners are walleyed at the thought of opening statements.
Underhanded practices such as demanding that businesses owners use personal assets in order to raise collateral for loans is just one example. The impersonal nature of sending small business owners emails as opposed to meeting them in person in order to discuss the altering of loan conditions is becoming more common. Owners are also given unacceptably short notice (48 hrs) in order to comply with the rearrangement of overdraft and lending terms.
Lord Mandelson who acts as the Business Secretary has openly expressed his disgust at the actions of the financial institutions. He feels that what they are doing is rapacious and counterproductive.
Banks are going to be judged by what they do now in order to help the economy through hard times and what they are doing now is of no help to anyone apart from them.
The Prime Minister is also alarmed by what certain banks are doing and feels that the current application of Machiavellian tactics is only adding to the loss of faith that people are exhibiting towards the banks.
More and more small business men are facing the loss of their homes after having their banks demand that they use their properties as collateral. A period of cash flow difficulty can now have far more of a profound effect than ever before due to economic instability.
It has become practice for the banks to reissue the accounts of those that are in desperate need to borrow, but with more onerous lending terms.
Some feel that the only solution is for the banks to borrow directly from the government in order to absorb the impact of the current recession. If the banks are so unyielding toward their business customers then eventually they will lose out; the businesses will eventually cease to exist.
Small businesses in relation to RBS did get some good news earlier in the week however, with RBS announcing that they would not be diddling the terms of overdraft agreements for another year. That said it remains to be seen whether at the end of the year, they cash in with some scandalously profligate interest rate in order to recoup what they have lost through a period of leniency.