It was only last week that the Government were hailed as saviours of the banking sector with their measures of bail outs, and capital injections. As far as I’m aware the banks who indicated that they would like access to funds have yet to sign up. The effect of this can therefore still be seen in that the banks are simply still not trusting each other enough to lend over the short term at reasonable rates.

As a condition of the £37bn government bail-out, RBS, HBOS and Lloyds TSB must continue lending at 2007 levels. There is also confusion over what the pledge to maintain 2007 funding levels actually means.

However, we are finding from callers to our website that terms far from getting better are actually getting worse. We have people in our office who are coming off of fixed rate mortgages and looking for tracker mortgages. They have plenty of equity and an excellent credit history, but one lender and I’ll name them,…Lloyds have asked for a £5,000 arrangement fee. As far as I can see this bank is just profiteering from the situation. I do therefore ask what public money is being used for if it is failing to have any effect on the lenders.

As well as individuals we now have an increasing number of small businesses calling us saying that they are having to close because they cannot get access to new or replacement funding.

Before a Business Select Committee hearing earlier this week, Lord Mandelson said there was anecdotal evidence that smaller businesses were being hit with a “double whammy” by some banks - being asked for more security and higher interest payments on loans, while also paying extra charges.

The British Chambers of Commerce (BCC) said that its members were finding it increasingly difficult to access funding. They found that parts of the funding deal which would have been within the cost of the lending, were now being charged as extras and that the cost of money was now also higher.

At this rate it could be months before there is any movement in the lending market. In any event when it does it will certainly not get back to the levels rates and practices that existed before this crises.

If you require any advice please contact a Help With Debt Advisor.

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Tags: administration, credit crunch, CVL, factoring, invoice discounting

This entry was posted on Thursday, October 23rd, 2008 at 11:15 am and is filed under Company Debt and Solutions. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.