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How Banks Can Fudge Small-Business Lending Data

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http://www.bbc.co.uk/news/business-14280628

If GDP figures for the economy in the second quarter of 2011 turn out to be as weak as most economists expect, the question of whether the banks are doing enough to support private-sector enterprises will again be asked loudly by politicians and media.

So the so-called Project Merlin lending figures, due to be published next month, will be scrutinised, to see whether Barclays, HSBC, Lloyds, Royal Bank of Scotland and Santander have lent to business what they promised the Treasury they would lend.

......

Don't take my word for it. The Bank of England describes the Merlin numbers like this: "these data are not collected under the Bank of England's statistical code of practice and definitions of data vary across banks".

Or to put it another way, the way the Merlin data are compiled is a bit like allowing football clubs to each have a different method for deciding how many league points they get from matches.

I think at the end he means it's a bit like allowing the BoE/Govt decide how to collect inflation figures.

Hilarious that BoE have a statistical code of practice.

The question of whether businesses actually want to get themselves into more debt is not being asked.

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Bank - small business relationships in this country are shocking.

Back in the day, banks used to loan money to businesses. The bank would charge an appropriate rate that covered their risk.

Now it is very difficult to get a loan for a small business unless not only do you pay the rate but also you need significant business assets to secure the loan against (many small businesses don't) or as a director you are willing to put your house and your personal finances on the line. Few people are willing to do this, hence it becomes much more difficult to borrow money to start a business.

The banks aren't interested in small business anymore. They'd rather play casino in the markets. The government bailed them out because they fulfill an important function in society - supposedly channelling money into small businesses and the like. But they're not doing this because the returns aren't attractive enough to pay bankster bonuses.

Threee things the government should do. Firstly separate out the investment and retail banking. The retail banking can then move back to the boring but sensibly profitable stuff of lending money out to individuals and small businesses. The investment banking can carry on following it's gambling ways.

Secondly, the goverment should tax the banks and use the money to set up some "industrial societies". Like building societies only specifically to do business loans. With proper business managers who assess business plans and work with their customers to develop susistainable and profitable businesses, not computer says no dimwits who just demand x% interest and the security of all the applicants assets.

Thirdly it should relax legislation for businesses under 5 people to help get businesses up and running and employing people.

Tories say they are the party of businesses. Let's see some action.

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Bank - small business relationships in this country are shocking.

Back in the day, banks used to loan money to businesses. The bank would charge an appropriate rate that covered their risk.

Now it is very difficult to get a loan for a small business unless not only do you pay the rate but also you need significant business assets to secure the loan against (many small businesses don't) or as a director you are willing to put your house and your personal finances on the line. Few people are willing to do this, hence it becomes much more difficult to borrow money to start a business.

The banks aren't interested in small business anymore. They'd rather play casino in the markets. The government bailed them out because they fulfill an important function in society - supposedly channelling money into small businesses and the like. But they're not doing this because the returns aren't attractive enough to pay bankster bonuses.

Threee things the government should do. Firstly separate out the investment and retail banking. The retail banking can then move back to the boring but sensibly profitable stuff of lending money out to individuals and small businesses. The investment banking can carry on following it's gambling ways.

Secondly, the goverment should tax the banks and use the money to set up some "industrial societies". Like building societies only specifically to do business loans. With proper business managers who assess business plans and work with their customers to develop susistainable and profitable businesses, not computer says no dimwits who just demand x% interest and the security of all the applicants assets.

Thirdly it should relax legislation for businesses under 5 people to help get businesses up and running and employing people.

Tories say they are the party of businesses. Let's see some action.

+1...some great ideas here.

If small business loans require the backing of directors' assets then they should be at mortgage rates (ha!!!) There seems to have been a tendency of late for unsecured personal loans, which charge higher rates, becoming, effectively, secured loans for anyone with assets either at inception or through the courts at default.

Banks are no longer performing their social function. The "banks and umbrellas" joke is no longer funny. They have mutated from mutualists to dangerous parasites.

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...the goverment should tax the banks and use the money to set up some "industrial societies". Like building societies only specifically to do business loans. With proper business managers who assess business plans and work with their customers to develop susistainable and profitable businesses, not computer says no dimwits who just demand x% interest and the security of all the applicants assets.

Instead of tax, this would be a properly "imaginative" use of QE (establishing & capitalizing "industrial societies"), and IMO more likely to be useful and effective in the long run.

Edited by Har Fast

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You keep forgetting that the government (any government) doesn't give a damn about small businesses.

The government only has one purpose these days:

to serve and protect the interests of multinational corporations and banks.

the sooner you realise this, the sooner you will understand government policies.

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Everyone I speak to with a small business is having their loans and overdraft facilities called in by the banks. It seems unlikely they are lending any extra money at all.

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Back in the day, banks used to loan money to businesses.

How long ago was that? 1825?

Banks are only interested in property speculation, always have been, they aren't there to help business start ups. I setup various businesses by saving money and working at the same time as running the business. It took me 20 years before I had anything self sustaining. Even today with a million dollar turnover and many years accounts, banks are not a place to borrow money.

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Instead of tax, this would be a properly "imaginative" use of QE (establishing & capitalizing "industrial societies"), and IMO more likely to be useful and effective in the long run.

TBF there are options for businesses at the moment, but most of these have their issues. Funding circle isn't great for long term cashflow funding and Vulture Capitalists just want to bleed people dry. Business angels can be somewhat better, but again their behaviour is highly variable.

I understand why the government wants to remain 1 step removed from business banking, but surely it would not cost them a huge amount to set up something like this.

The thing is that it is actually a profitable (but not immensely exciting) business.

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You keep forgetting that the government (any government) doesn't give a damn about small businesses.

The government only has one purpose these days:

to serve and protect the interests of multinational corporations and banks.

the sooner you realise this, the sooner you will understand government policies.

Of course you are right.

But we might hope that along with the rhetoric they might throw us the odd scrap occassionally.

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How long ago was that? 1825?

Banks are only interested in property speculation, always have been, they aren't there to help business start ups. I setup various businesses by saving money and working at the same time as running the business. It took me 20 years before I had anything self sustaining. Even today with a million dollar turnover and many years accounts, banks are not a place to borrow money.

So where do you go?

WONGA!

:lol:

Edited by DoctorJ

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Everyone I speak to with a small business is having their loans and overdraft facilities called in by the banks. It seems unlikely they are lending any extra money at all.

The banks are clearly not fit for purpose.

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Banks are only interested in property speculation, always have been, they aren't there to help business start ups. I setup various businesses by saving money and working at the same time as running the business. It took me 20 years before I had anything self sustaining. Even today with a million dollar turnover and many years accounts, banks are not a place to borrow money.

The only reasonable way to do things if at all possible.

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The banks are clearly not fit for purpose.

Yes they are. It's just that their purpose isn't what you would like it to be.

The purpose of banks is to make banksters rich, I don't understand why anyone would expect that they have some social or charitable obligation to society.

The only way to change this is with a complete financial, monetary and corporate law reform.

Abolish fractional reserve banking and debt based money.

Make large shareholders liable for the actions of corporations.

(just to mention a few things that need to be reformed)

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  • 338 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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