The bank will continue to provide support for businesses which trade or aspire to trade internationally and commits to providing lending facilities to support business growth and job creation.

The bank has confirmed that it met its Merlin lending intentions in 2011, which were agreed with the UK Government, exceeding the full year target to provide £38.8 billion of lending facilities to UK business customers and supplying gross new lending facilities of more than £11.7bn to Small and Medium-sized Enterprises (SMEs).

Having met its Merlin intentions in 2011, HSBC plans to lend even more to SMEs in 2012, providing there is suitable demand. In addition, to reinforce the bank’s strategy to be the leading international trade and business bank, HSBC will further support UK businesses by committing to:

• Recruit around 50 additional International Commercial Managers, ensuring customers involved in overseas trade are fully supported. This will bring the total number of International Commercial Managers to 180;
• Support export trade to the tune of £7 billion through our Trade Finance capabilities;
• Look to manage £30 billion of invoices for customers trading within the UK or internationally, providing critical working capital for these customers;
• Look to approve at least 80 per cent of applications for finance from SMEs; and
• Extend the availability of HSBC’s International Business Overdraft, which offers reduced interest rate for each overseas country a small business is trading with, up to a maximum discount of three per cent for the first 12 months.

Jacques-Emmanuel Blanchet, head of commercial banking UK at HSBC, said: “HSBC is committed to supporting UK business. In 2011, the Merlin intentions gave focus to SME lending, and we continued to enhance our support, launching new innovative products and holding hundreds of events across the UK and the world, to encourage UK businesses to share their knowledge and develop long term relationships internationally.

“In 2012 we will further increase our support for SMEs looking to grow and internationalise, across all sectors and all regions. Many of our customers are experiencing growth by trading in new markets and we are very well placed to support this, through our growing team of specialist International commercial managers and HSBC’s enviable global network, to give UK businesses the best chance of success.”

The bank has opened a new Corporate Banking Centre in St Albans and another will open in Guildford before the end of year, taking the overall number nationwide to 22. This follows a doubling of the centres from 10 to 20 since 2007.  

The expansion is a key part of its intention to grow its relationship-based approach to commercial banking and it plans to increase its presence further in coming years.

Since 2007, the bank’s commercial lending balances have grown by more than 40 per cent, including £500m specifically to fund renewable energy sector projects.

Deposits from business customers have more than quadrupled from £1.4 billion in 2007 to £6.7 billion by June 2011. 

Keith Alderson, managing director of corporate and business banking at The Co-operative Bank, said: “Throughout a period when many other banks have scaled back support to business customers, we have not just maintained our support but stepped up our commitment.

“The rate of growth in our customer numbers, lending and deposits shows how the Bank is now challenging traditional providers.  A focus on high levels of service, built on developing long-term supportive relationships is resonating with businesses at a time when they really need support from their bank.

“We are continuing to invest to improve our future capability and scale so that we can offer an even better service to a wider range of customers.

“At this time, more than any other, businesses need guidance, advice and the support of their bank whether they are seeking new opportunities to grow or dealing with challenging economic environment.

“And as part of The Co-operative Group we are in a unique position in the market to offer customers access to a broad range of services and expertise spanning sectors from legal services to pharmaceutical care.”

The clinics launch as recent statistics show that only 15 per cent of businesses applied for borrowing in the last year, reflecting a crisis of confidence among businesses. The research also reveals that while 42 per cent of businesses think they will get a business loan before they apply, 75 per cent actually succeed, indicating that many businesses don’t believe they can get finance.

The first clinic launched by Barclays Retail and Business Banking chief executive Antony Jenkins in Manchester kick started 85 UK-wide clinics, which aim to reach around 1,600 businesses.

Barclays business people will answer key questions on lending and walk businesses through the loan application process, with alternative finance providers on-hand to provide a fully rounded picture of all the financial options available. At the same time, local businesses will have the opportunity to tackle senior bank leaders head-on about the barriers to borrowing that they feel they face.

Antony Jenkins, chief executive, Barclays Retail and Business Banking said: “Barclays is committed to helping revitalise the UK economy which is dependent on small businesses having the confidence to invest and grow.

“Confidence will begin to be restored when businesses are equipped with the belief to make informed decisions about their future.

“Every day Barclays is committed to helping small businesses grow. From the top to the bottom of the UK, our lending clinics will take the mystery out of borrowing for thousands of businesses.”

It is thought that the ICB, due to report on Monday, will propose that internal ring fences should be put in place to separate the banks’ retail and wholesale divisions and that the banks should increase the amount of capital they hold.

The banking lobby has said that doing this would have a detrimental effect on the amount of money that it can lend and that the cost of finance would increase as a result. They have also said that any reforms now would derail economic recovery.

The banks say that ringfencing will remove the implicit Government guarantee to bail-out a bank that is in trouble and that being required to hold more capital will mean that there is less money to lend.

However, in a new paper, ‘Does bank ringfencing automatically mean an increase in the cost of borrowing?’, the FSB argues that the guarantee would be removed from the investment banking arm and would remain for the retail arm – the section of the bank that lends to people and small businesses.

And, increasing the capital requirements over the medium term and putting a ringfence in place would be beneficial to the structural resilience of the UK banking sector.

If the ICB suggests that capital requirements are raised to more than 10 per cent for example, the FSB recommends reforms be announced as soon as possible but that the banks be given the course of this Parliament to reach those standards. Funding for this increase can be made up from ear-marked profits and reductions in short term incentivised pay.

John Walker, national chairman, Federation of Small Businesses, said:

“The banking sector cannot be too big to fail as the taxpayer cannot afford another bank bail-out. The Government has a golden opportunity to reform the banking sector and it must stand by the promises that it has made.

“The recommendations that the ICB make must be looked at closely and the Government must act on them as soon as possible and ensure they are completed before the end of the next General Election. The Government must use this once in a lifetime opportunity to make the banking sector safer, more competitive and less burdensome on the taxpayer.”

NatWest and RBS will offer customers a range of solutions:

Fast-track requests for temporary credit increases provide short term financing to cover cost of repairs and replacement stock while businesses wait for insurance claims to be paid offer repayment holidays on existing loans to give businesses the breathing space they need to get back on their feet refund or waive overdraft fees incurred as a result of the riots on a case by case base basis. Other banks have announced similar schemes.

Meanwhile, businesses who have suffered damage as a result of the riots need to claim on their insurance quickly or they risk not being able to recover their losses, warns City law firm Reynolds Porter Chamberlain LLP (RPC).

RPC explains that most insurers require claims for riot damage to be notified within a very short period – typically seven days – otherwise the claim may be rejected.

This is because the insurer can make a claim in the policy holder’s name against the police to recover their losses under the Riots (Damages) Act 1886 (RDA). However, to do so that claim must normally be lodged within 14 days of the damage occurring.

Businesses that have suffered riot damage that do not have property insurance can also make a claim to recover their losses directly from the police under the RDA.

Stuart White, partner at RPC, comments: “Riots have caused millions of pounds worth of damage over the last few days.  Businesses that have suffered riot damage should notify their insurer as soon as possible so as to avoid being left without insurance cover. Any delay is an unnecessary risk.”

“Some independent retail units have been completely destroyed by the rioters, making them dependent on recovering the value of the damage to start trading again.”

“The good news for some of the smaller retail units that have been damaged is that even if they do not have a property insurance policy they may be able to recover the value of any damage sustained because of the rioting directly from the police.”

“However the compensation under the RDA will not normally extend to the financial losses of the business while it is unable to trade.  Trading losses are likely to be recoverable only by businesses with business interruption insurance.”

Stuart White adds: “Given the scale of these riots and the current pressure on police budgeting there will doubtless be calls to reform a law that compels police forces to compensate businesses and individuals for riot damage.”

“We will see whether insurers who cover police forces for the cost of RDA claims respond to these riots by pushing up the cost of their insurance.”

The quarterly report, which looks at the financial position of GB businesses, reveals that one in four (24 per cent) businesses strongly disagree with banks being supportive, up seven per cent on September 2010 figures.

The Index also shows that one in four (24 per cent) businesses are concerned about their debts. Over the last quarter, worry has intensified amongst businesses who are concerned about their debt, and small businesses seem particularly vulnerable. 43 percent of businesses concerned about their debts are now worried about bank loans and finance debt; this compares with just 24 per cent in September 2010 – a 19 per cent increase.

R3 President, Frances Coulson, commented: “The increase in the number of businesses who no longer feel that banks are being supportive indicates that a growing proportion of the business community are either struggling to service their existing debts or finding it hard to acquire further lines of credit.

“As we have seen in previous recessions, once the economy begins to show signs of recovery creditors tend to make a more concerted effort to pursue those who are indebted to them and tighten up their lending facilities. However, we are still in the early stages of recovery and it takes time for this to translate into tangible relief for businesses. For the many businesses that used all their reserves to survive the recession, supportive creditors are more important than ever.”

According to the index businesses perceive trade creditors to be the most supportive creditors, but less so then they were six months ago. HMRC were perceived to be most supportive creditor last quarter – they are now second, with the banks being seen as the least supportive creditor.

Frances Coulson said: “Insolvency Practitioners working with distressed businesses are seeing an increase in the number of Time to Pay applications being rejected. This may well explain why HMRC is no longer seen as the most supportive creditor.”

Across the sectors, retail and distribution businesses are most likely to believe creditors to be supportive; conversely, the report indicates that 83 per cent of retail and distribution companies are experiencing at least one sign of distress. This compares to 77 per cent of manufacturing firms and 65 per cent of service firms.

Frances Coulson added: “The fact that more retail and distribution firms are struggling while at the same time stating that creditors are being supportive, suggests these businesses have had to call on these creditors. With VAT rises being absorbed by many retailers and evidence that consumers are tightening their purse strings, it is not surprising that the retail sector, in particular, is showing more signs of distress.

“Despite the worrying minority, the report reveals signs of distress on the whole have decreased this quarter, which can only be a good thing.”

The number of savings customers for the bank has increased from 8,500 at the end of 2009 to 30,000 at the end of 2010.

Phillip Monks, CEO of Aldermore, said: “This is conclusive proof that we have created a bank that can attract long term, secure deposits.”

“Because of our bank’s low cost base and the state of the art processes and systems we have put in place we have plenty of headroom to lend out that money prudently and profitably to the UK’s small and medium sized businesses.”

At the end of 2010 the bank had outstanding loans to SMEs of £410.2 million, an increase of 107 per cent on the £198.6 million 12 months ago. Asset finance was one of the strongest areas of Aldermore’s growth with funding provided to SMEs increasing by 206 per cent to £69.8 million (end Dec 2010), up from £22.8m 12 months previously.

Simon Healy, head of savings at Aldermore, explained that customers at Aldermore are increasingly choosing the bank’s longer term savings products: “Aldermore has been very careful to ensure that longer term savings products are attractive and match what customers are looking for, as longer term savings products can have a really positive impact on our overall financial performance.”

“We believe our savings business offers the right mix – very decent interest rates and simple and transparent products all backed by friendly and efficient service. That is why we are producing such strong growth and have such a low customer churn.”

Speaking at the Better Business Finance roadshow in Sheffield, which is the first in a series of free UK-wide events where businesses can come along to talk to lenders and participate in workshops and seminars, Lord Sassoon said:

“As a Government we have been working hard with the banks to try and get credit flowing again. Today, I am delighted to be able to announce the launch of http://www.betterbusinessfinance.co.uk/. The site provides a one-stop-shop for businesses from which they could get impartial information about how to secure finance and consider the best options available for their business. It also includes a series of fact sheets about many of the issues that matter most to them, so I urge businesses to visit the site.”

BBA chief executive Angela Knight said:

“Making the right impression is as vital for business as for individuals. Our new website – http://www.betterbusinessfinance.co.uk/ – is designed to put businesses in touch with the kind of practical help they need to help make any application for credit a winner. It will also let people know where they can go for additional help and support including our calendar of regional roadshows.

On 16^th March 15:00 GMT, the expert panel will share their experiences in turning an idea into a successful enterprise, including how to market your business, manage cashflow and improve the chances of securing bank finance. Viewers will also get the opportunity to question the panel on the issues affecting them. After registering for the online event, one lucky participant will be randomly selected for a personal business mentoring session with James Caan at his Mayfair office in London.

James Caan, said: “There’s no single guide that will tell you how to run a profitable business but people who seek advice early on will always stand a better chance of success. Hopefully by sharing my experiences at this event I can encourage more people to turn their idea into a successful enterprise.”

Peter Ibbetson, said: “Britain’s recovery relies on successful new businesses entering the market so we’re delighted James is joining us to help them make the first steps. We’re helping nearly 2,000 businesses get off the ground every week – so there are clearly lots of opportunities out there.”

The Real Cleaning Company was launched in June 1998, with little more than a good idea and a commitment to doing some hard work, according to its founder and managing director Howard Ashcroft.

“The original idea was to subcontract work from my brother, Richard,” explains Ashcroft. “He already had a successful cleaning business, so I borrowed £4,000 from my dad to set myself up.”

Unfortunately, this didn’t go quite according to plan. Disputes over the amount of work he was getting and the payments for it meant the siblings fell out. “I was left with nothing – all the contracts were his, and I was left to cleaning friends’ flats. I was going to go back and try and get a job in the hospitality industry, where I had come from.”

Then by chance, Ashcroft received a phone call that was meant for his brother – one of his clients had some work that had come up cleaning a shop that had recently been refurbished.

“The client thought I was Richard and simply asked if I could do the job. I kept up the pretence, said yes, and the rest is history!”

This client became Ashcroft’s first direct customer, and the work started to flow for him. And while his firm does carry out a vast range of cleaning services, shop cleaning – after refit or refurbishment – is its speciality.

The company now operates across the UK, and employs over a dozen full time staff, as well as many more on a job-by-job basis.

“In our first year, we turned over £15,000,” says Ashcroft. “In September this year, we reached almost £100,000 for that month alone.” With a number of clients, including shopfitters for the likes of Carphone Warehouse, business looks good.

The toughest part of the job is in planning the work, explains Ashcroft. “It’s seven days a week, 24 hours a day. Jobs come in all the time, and they change all the time – if a tradesperson lets down the shopfitter, they get delayed, which means we get delayed. There are lots of postponements and cancellations.”

“We’re in a very busy period with around 25 projects a week, so we need to stay organised – it’s just my wife and I organising the office, though we’ve just taken on someone to help us. And it’s hard work – the average day is around 14 hours.”

But it hasn’t always been that way.

The downturn

Like many SMEs, Ashcroft’s business started to struggle during the recession. “We almost lost everything last year, we had to cut our prices by 25-30 per cent,” he explains. “We’d always prided ourselves on being a top-quality company, and our prices reflected that. But the top end completely disappeared.

“But it’s been the making of us. We had to think really clearly about how to keep up our levels of service, but at the same time keep our costs down. This has meant planning the jobs better, keeping staff costs down, and being more efficient in everything we do.”

So with a turnover of £380,000 in 2009, and a tough first five months of this year, the Real Cleaning Company expects to turn over around £600,000 this year.

Banking

And all of this was done with very little finance. Although Ashcroft started out with a family loan, he resisted bank finance until he was three or four years into the business, when he took out a bank loan for £10,000 to improve his inventory and equipment. “Never again, it took me five years to pay it back!”

The company also managed to run up a large overdraft, up to £25,000 at one stage, but this has also now disappeared, which means that apart from finance on one of his vehicles, the company is now debt free.

And having banked with Natwest ever since the company launched, Ashcroft is now in the process of switching his business to RBS. “The division I am moving to has just been bought by Santander,” he explains. “We’ve had a recommendation about the bank’s business manager from one of our sub-contractors – he’s apparently very proactive and works solely with companies of our size, and has fewer clients to look after. This means that hopefully we’ll have a more personal service.”

The company also uses an invoice financing provider, to manage its cashflow. “When we start The next step At the moment, says Ashcroft, the company is so busy it has having to turn away business. “It’s very frustrating, knowing that the work is out there, but we are at capacity at the moment. This does give me confidence, though, to rack up the scale of our business.”

Ashcroft has ambitious plans. At the moment, he’s working with a software developer to automate the planning of jobs, which he says will make the business much more efficient. He’s also looking to take his company to the next level, with the possibility of him exiting in the next two or three years. “I’ve been meeting a lot of successful people who have been bought out by venture capitalists,” he explains.

“I’m now looking for an investor who can bring some commercial experience to our operation, as well as taking on a stake in the company.”

The plan, says Ashcroft, is to either sell completely in the near future, or put in place a management team that can run the business while he moves on.

“I’ve been in this business for 13 years and know it inside-out,” he says. “But I don’t want to be running it for ever. I will either sell, or leave it to others to manage and earn an income from it.

“But I’m not just going to retire – I’m the sort of person that has to work all the time. So I’ll move into the hospitality business, maybe a hotel or a restaurant/bar, maybe the events business.

Lessons learned

“I made so many mistakes,” says Ashcroft. “If I could go back to my earlier self, I’d say never think I know it all. I nearly lost the business on three occasions and it has been very difficult. At one stage, I was trying to make the business something that the market wouldn’t allow, and that’s the wrong way to go about things.

“Because of the recession, we had to change the format. we had to change the idea of the company to survive.

“Our success is in making it work. We still offer a high quality service and we do a fantastic job. I like to say that we started out as the Gucci of cleaning, and now we’re the Ikea – still great quality, but without so many of the frills.”

Sibling rivalry

And finally, has he made up with his brother? “He’s my best friend now, though I’m not sure if I’m his!

“We’re very different people, but we get on well – I did rub it in a bit, though, when my profit was bigger than his turnover last month!”