Small businesses: your experiences
Adam Whipps owns Leisure Marketing Ltd in Essex. The company operates two retail outlets and an online golf-clothing and accessories store, and has an annual turnover of just under £1m.
He has never been turned down or failed to repay a loan or overdraft for 12 years - but has just found out his bank has doubled his overdraft rates overnight.
I have had a good relationship with my bank for 12 years, getting loans for about £25,000 and overdrafts for about the same, always paying them back on the agreed terms.
Late last month I received a letter saying how my bank is committed to small businesses - and then the revelation about my two accounts: one which has a 5% overdraft interest-rate above-base-rate was doubling to 10%; the other was up from 5% to 12%.
I couldn't believe it - they had more than doubled the interest on my overdraft.
If small businesses go to the wall, it'll cost the banks money, so it becomes a vicious circle
I thought that was bad, but, as I found out, apparently I am a slightly lower risk to them as I have been the bank's customer for so long.
My partner, who is at the same bank, has been running a business for just over a year now and her rate has gone up from 5% to 17%.
It's the age-old situation of banks making sure they never lose.
They appear to be hitting the core customers knowing they can maximise income from us while we're stuck, at least in the short term.
They have got us over a barrel - leaving it cheaper in some cases to borrow money on your personal credit card!
It makes it more difficult to get the necessary finance to plough into a business to pay for short-term requirements.
But if small businesses go to the wall, it'll cost the banks money, so it becomes a vicious circle.
Source:http://news.bbc.co.uk/2/hi/business/7685866.stm