Banks fail small businesses in financial trouble, says report
A new survey examining the relationship between small businesses and their banks has revealed the majority of lenders are of little support if firms find themselves in financial difficulty, if their business fails or if they sought to restart in business following failure.
The Centre for SME Development at the Ulster Business School (UBS) and the Federation of Small Businesses (FSB) has announced the findings from the study authored by Professor Mark Durkin (UBS), Professor Pauric McGowan (UBS) and Dr Aodheen McCartan (School of Communication).
The FSB has developed a number of policies to respond to the issues highlighted in the survey and have shared these with the Finance Minister Sammy Wilson.
Almost two thirds of respondents (61.2%) indicated an intention to switch banking provider over the past 36 months.
However, relationship-managed customers were more likely to consider switching provider (65.2%) and expressed concern over the competitiveness of their bank's charges. However, only 9% of respondents actually switched bank in the past 3 years.
And 73% of 'early SMEs' – in operation for less than five years, compared to 65% of 'established SMEs', in operation for more than five years – use internet banking more often than they did three years ago.
'Early stage SMEs' assigned less importance to almost every relationship and service aspect than the 'established SMEs'.
Price and charges for services are key and ongoing causes of dissatisfaction.
Although these are described as very important to the SME owner/manager, bank performance remains poor.
The study shows that this situation has either stayed the same or worsened over the past 36 months.
Speaking at the launch of the study, Mr Wilson said that this was the first proper, evidence-based assessment of the situation.
"By looking at businesses that pre-date the recession, as well as newer ones, it lets us gain real understanding of the actual situation and the perceptions of small businesses," he said.