News
Banks to offer more finance to printers next year, say experts
Printers' ability to attract finance from banks and other lenders will improve next year, industry experts have predicted.
This year has been categorised by the credit crunch, which has left many printers with no option but to call in the administrators as bank lending to SMEs has all but dried up.
However, some experts have predicted an improvement in lending conditions in 2009 after a number of high-street banks announced measures to improve lending to small businesses, some following urging from the government.
Gerry Hoare, a banking veteran who recently established finance advisory service Dealbureau, said that 2009 will see a return to confidence in lending between banks and printers.
"The liquidity crisis will ease, although it won’t be until after the first quarter. It is a question of confidence between banks and lenders. Also, a business has to be confident that it has the right business model and is borrowing money to grow, not just to fund losses," he said.
Murray Booker, a director of print specialist finance broker BPFL, said that many banks are waiting until the new year before they make decisions in the most cautious climate for lending ever known.
"Let’s hope things get back to normal next year, he said. Ultimately, bank lending is key to everything and banks won’t make money if they don’t lend money."
Last week Barclays announced it was to boost lending to small to medium-sized businesses in the UK by £1.5bn next year, following in the footsteps of HSBC which announced it would inject an additional £1bn into SMEs.
The moves will come as a welcome relief to many printers, which are operating in a highly leveraged industry that is heavily exposed to the credit markets.
John Grogan, managing director at Grgprint.com, said: "The situation is more acute for printers than other businesses; the industry is exceptionally capital intensive. Re-financing becomes increasingly difficult with residual values of both plant and property falling."
Hoare added that businesses should also consider other forms of finance such as invoice factoring or a stock facility that will enable them to ride out any changes in payment terms or credit insurance issues that printers may face in 2009.
SME LENDING
HSBC extra £1bn of finance available to UK business
Barclays plans to increase lending to SMEs to £16.5bn
Lloyds TSB promised to pass on every base rate cut in 2008 and 2009 to SME customers
Comments
Jane Rosen - 19 December 2008
Just tried to borrow 100k to finance a perfect binding line. Was asked by the bank for personal guarantees, so have decided to leave it for 12 months. Guarantees not a problem, but I think there is some priciples here as I have been with this bank for 20 years.Decision now made to attend all of the trade auctions next year. !!!!!
WJM - 19 December 2008
I think you are very wrong there Jane. A personal guarantee should be a very big problem for you. Why should the bank need a guarantee from you when the lending is already secured on significant asset. I presume they would be funding at most 80% of the purchase price, so at no point will they be exposed beyond the realisable value of the asset. It is greedy of the lender and naive of the borrower to involve any security beyond the bank's exposure. With heavyweight printing kit, the asset comfortably provides this security.
What I do hope will come of this economic upheaval is that banks will start looking at the basic strength of the borrower and start refusing to lend to business who cannot provide proper management accounts and realistic forward business plans. The specialist lenders (aka snatch-back asset grabbers) have done a great deal of damage to this industry in the past by lending to people who, frankly, do not know how to run a business. As their source of funding dries up, hopefully they will now disappear. The industry will be stronger without them.
Bill Cheesman - 19 December 2008
Have to agree with most of that - however, in the real world - our bank is holding almost 4 times our total debt in assets and personal guarantees. Whenever I get the chance, I protest, only to be told it is the 'bank's policy'. Exactly what policy that is has never been satisfactorily explained.
As for the increased lending - I'll believe it when I see it.
John Grogan - 19 December 2008
I find it dificult to believe Barclay's will be coming up trumps. I recently requested increase in overdraft £10k for period of one month and was declined. I then ordered £2k in Euros, and was again declined. We are quite asset rich.
In my view there is a lot of rhetoric out there be it from politicians or bankers, but very little to support it.
WJM - 19 December 2008
If that is their attitude then it is time to find a new bank. The old established banks are riddled with arrogant complacency which is why so many of them have failed so miserably recently. But there are banks out there who are progressive and business-like. You would not take that kind of cr*p attitude from any other supplier so why let a bank get away with it. It is not difficult to change banks.
Bill Cheesman - 19 December 2008
We have tried moving our accounts to HSBC, LloydsTSB, (un)Co-operative and Barclays with no success. Have you any others in mind?
WJM - 19 December 2008
Well now you have tried all the big, complacent, arrogant, overstaffed and under-skilled banks run by the gaumless and the greedy, why dont you try a different type? By that I mean a smaller, more nimble, commercially astute bank. I wont name any but there are lots of them out there, you just wont find them on the high street.
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