An article in the Sunday Times on the 18th August 2013 reported that Britain’s most senior bank regulator, Andrew Bailey, highlighted why it might be difficult to encourage lending: â€œBanks have moved from a lending model concentrated on property to one ‘ based on “evidence of a business plan that indicates returns to the firm that will repay borrowing”.
Unlike property-based lending, where a bank merely has to satisfy itself that the asset is fairly valued and the borrower has sufficient cash flow to make the repayments, assessing the business plan of a company that might have little, if anything, in the way of fixed assets is more difficult, not to mention time-consuming.
As Mr Bailey noted: “distribution capacity for this type of lending lags well behind that for mortgages. Building a competent small business lending network is a lengthy and expensive process.
â€œThe continuing impact of interest rate swaps also remains a major impediment to new lending, particularly where property businesses are concerned
â€œ So, it is hardly surprising that small business lending remains muted despite the best efforts of the Government and the Bank of England. .
â€œMuch was wrong in the past with banks’ lending systems and correcting these problems and their legacy will take time. The latest lending figures do not look impressive but they could have been worse,â€ ended Bailey.
â€œIn this challenging environment, it is inevitably more difficult than ever to secure hotel lending, which is where we can help. We are specialist commercial property lenders for the hotel sector and can recommend the best hotel loan solutions for your business and put your business plan together,â€ added Chris McDonagh for Stewart Hindley & Partners.