Government SME strategy failing: Bibby

The problem is that any of the initiatives introduced by the Govt have been enforced by traditional high st lenders. Lenders can apply discounts or initiatives introduced by the Govt, however, lenders still use their ever stricter criteria for underwriting. So business has to first be able to jump through the tight criteria for all borrowers before any initiatives are applied. It simply does not work. Examples of what lenders are doing;
– Stress testing investments at extreme highs near 6-8 % over the loan term.
– Use additional Cover ratio's for example 190% on Residential Investment (as one of the largest lenders do!!).
This along with the fact that they have increased margins due to "cost of funds" has meant that any Govt initiative so far has not been succesfully applied. Purely as the clients do not pass the tight lending criteria which the lenders implement and have to be pass before "they" decide who they lend to. More expensive funding options are used and hence the increase in Invoice/Cashflow Finance, Asset Refinance, 2nd Charge Secured lending and Bridging Finance.
Mobeen Chishti – Total Money Management