Bristol businesses hit by double whammy (Paul Harrod)

Bristol businesses hit by double whammy

February 13, 2009 12:00 AM

Bristol businesses are being hit hard by banks tightening up on their lending practices, according to Paul Harrod, Prospective Liberal Democrat MP for Bristol North West.

The most common complaint is the withdrawal, or reduction, of overdraft facilities, and much stricter terms on those businesses that offer credit or debit card facilities.

"I have been struck by the number of business owners that have told me recently that, not only have the banks refused lending requests, but that their existing overdrafts have been taken away.

"Overdrafts are a business' life-line, and allow them to manage the inevitable fluctuations in cash-flow. If these are being taken away by the banks then the impact of the recession on local businesses could be much more serious than we thought.

"On top of that some businesses are reporting that banks are charging higher fees for processing credit and debit card payments, and holding on to the money for up to 30 days before handing it over to the business. This can make it hard for a business to keep on offering these services and that will greatly inconvenience us as customers too."

Dr Vince Cable, Lib Dem Shadow Chancellor, visited Bristol last month and held a meeting with some local business leaders. He told them that with the banks effectively nationalised, the Government must uses its new powers to ensure that the supply of money to small businesses is maintained.

"It is the bankers' job to assess risk and creditworthiness - but the Government must use its influence to set the overall strategy for lending" said Dr Cable.

Dr Cable stressed that he hoped that bank nationalisation was a temporary solution but said that "in the meantime the Government is the paymaster and must act decisively in the national interest".