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Bank Loan Appeals: Success for SMEs

Bank lending is not the easiest route to funding for many SMEs. However, figures have shown that while many small businesses looking for funding are turned down for bank loans and overdrafts, many of them who appeal against the bank’s decision manage to get the rejection overturned.

The independent review by the British Bankers Association has shown that of the 2,177 SMEs who appealed against a bank’s lending decision, around 847 of them managed to appeal successfully. This lead them to agree alternative credit terms with their bank, therefore getting access to the funding that they needed – albeit on slightly different terms.

However, of those businesses who had applied for bank loans – which added up to around 827,000 SMEs in the last 12 months – only 2% appealed against the bank’s decision. This could demonstrate a lack of awareness of the options available for SMEs. The report by the BBA concludes that more businesses would appeal for funding if they knew the level of protection and the often successful nature of the appeals process.

Given that almost 40% of appeals are successful, it’s a process worth knowing about. This also shows that banks are not giving many small businesses a fair assessment in the first place – if their decision making process was entirely correct, nowhere near as many decisions would be overturned.

The Forum of Private Business has commented; “The report is right in identifying an over-centralised banking system that relies far too heavily on automated risk criteria and on data from credit rating companies, many of which appear to use wildly different factors to assess a firm’s creditworthiness.”

This all shows that is SMEs want a fair assessment from the banks, they might just have to take it into their own hands.



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