Phantom loans
It’s odd, this being a journalist. You swan around, thinking you know everything about, say, RBS, and yet, actually, you don’t know anything at all.
For example: I know how much it made last year, and I know how much its share prices dropped last year, and I know that its CEO was hounded into giving up his bonus.
I don’t know, though, what it’s like to work in a local branch. I don’t know what weird little workarounds they have to use to make the computer systems function properly. I have no idea how most of the people who work for it feel about their boss’s bonus – which is surely more important than what the Government thinks.
There are few professions more easily blinded by figures than us. Numbers never lie: if a company’s doing well, it’ll be right there on its balance sheet. If a bank’s lending, it’ll be there in black and white.
Or not. Back in August, the Bank of England published figures showing banks are going over and above the call of duty when it comes to lending. Admittedly, they didn’t lend that much to small businesses – but they shrugged their shoulders and said it wasn’t their fault. Obviously, we knew that couldn’t possibly be true – businesses pointed out that with the cost of borrowing now roughly equalling Greece’s debt-to-GDP ratio, of course there’s not going to be any demand.
But I didn’t know quite how bad it had got. Writing a piece about funding for a new project, I though it would be nice and easy to find someone who had got a bank loan: ‘Right. I need a really, really cool business that got started using a bank loan,’ I tweeted, airily. No response. So I emailed a friend who had appeared on the billboard for a large bank. ‘Nope, sorry’, was the response.
Fair enough – I called the PR of one of the big banks, who put me in touch with someone. ‘It’s a really great company’, he assured me. He was right, it was: but they hadn’t taken out a bank loan. They’d had to fund their business using an overdraft, which they’d been granted four years ago. Would they get it again these days? ‘No, I don’t think so’, admitted the chap I was speaking to.
This was becoming a serious problem. I emailed as many people as I could think of. Will, who runs Arena Flowers (which has a not insignificant turnover) put it in explicit terms: ‘basically, the only way you can get money (even under the Government’s scheme where they guarantee it (extended for bigger companies and bigger loans during the credit crisis)) is if you don’t need it.
‘If you need money (especially if you have limited assets, like us….we don’t have machines etc) then you need big profits etc to get a loan….but then you wouldn’t need the loan.’
The next figures on lending targets are due out on Monday. This morning, Sky News City hack Mark Kleinman tweeted: ‘British Banker’s Association confirms my scoop that big banks missed SME lending target by £1.1bn but smashed overall target.’ Hmm.
