Banks have promised to try and make life easier for small businesses by agreeing a ‘statement of principles’ brokered by Business Secretary Peter Mandelson.
Businesses say they are having problems arranging loans and overdrafts despite the billions of pounds the government has injected in to the economy as banks have screwed down lending criteria.
Following the meeting, banks have agreed to cut the time it takes to transfer business accounts from one bank to another from ten to five working days.
The Federation of Small Businesses said the concession was "very welcome" because it would allow firms to shop around more easily between banks in search of better lending terms.
Banks have also agreed to consider business assets as securities before business-owners' personal assets. That could reduce the number of personal bankruptcies that result from businesses collapsing during the recession.
The borrowing problem seems to have bypassed care worker Kaylie Coomber, 20, from Highnam, Gloucestershire, who asked her bank for a £50 overdraft extension and got a letter back telling her she could have £84million.
She had telephoned the Alliance and Leicester to ask if they would give her the higher limit in the run up to Christmas – and the paperwork came through telling her she had an £84million overdraft facility and would only be charged £5 for the privilege.
Her bank, the Alliance and Leicester said: “We apologise for any inconvenience or upset caused to Kaylie and can confirm this is an unfortunate one-off incident. The letter was sent off incorrectly.”
Meanwhile, on the markets, both the FTSE and the DOW closed up – the FTSE rose 251 points from 4049 to 4300 and the DOW 296 points from 8638 to 8934. The Pound closed unchanged against the US dollar and Euro – standing at $1.47 and 1.56 Euros.
This article was written by eCommerce Associates for Bank -- Accounts and our Finance Blog
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