Page last updated at 14:14 GMT, Thursday, 23 October 2008 15:14 UK

Small businesses: your experiences

Small businesses should get more help from banks, according to the Chancellor Alistair Darling and Business Secretary Lord Mandelson.

But how hard is it at the moment for banks to lend more to small firms?

Here are some of the experiences of small business owners who spoke to the BBC.

Adam Whipps
Adam felt lucky his overdraft rate doubled, rather than tripled

Adam Whipps owns Leisure Marketing Ltd in Essex. The company operates two retail outlets and an online golf-clothing and accessories store, and has an annual turnover of just under 1m.

He has never been turned down or failed to repay a loan or overdraft for 12 years - but has just found out his bank has doubled his overdraft rates overnight.

I have had a good relationship with my bank for 12 years, getting loans for about 25,000 and overdrafts for about the same, always paying them back on the agreed terms.

Late last month I received a letter saying how my bank is committed to small businesses - and then the revelation about my two accounts: one which has a 5% overdraft interest-rate above-base-rate was doubling to 10%; the other was up from 5% to 12%.

I couldn't believe it - they had more than doubled the interest on my overdraft.

If small businesses go to the wall, it'll cost the banks money, so it becomes a vicious circle

Adam Whipps
Small business owner

I thought that was bad, but, as I found out, apparently I am a slightly lower risk to them as I have been the bank's customer for so long.

My partner, who is at the same bank, has been running a business for just over a year now and her rate has gone up from 5% to 17%.

It's the age-old situation of banks making sure they never lose.

They appear to be hitting the core customers knowing they can maximise income from us while we're stuck, at least in the short term.

They have got us over a barrel - leaving it cheaper in some cases to borrow money on your personal credit card!

It makes it more difficult to get the necessary finance to plough into a business to pay for short-term requirements.

But if small businesses go to the wall, it'll cost the banks money, so it becomes a vicious circle.

Martin Sutton
Martin has written to the Chancellor as he'd like more tax flexibility

Martin Sutton runs electrical-based engineering company MJS Engineering Ltd in Croydon with a turnover of 400,000 a year.

He has served domestic customers and railway stations for 11 years, but has been refused an overdraft by his bank, leaving his business, which employs 10 people full-time, in jeopardy.

I have had good relations with my current bank for the last eight years and they provide me with a loan and an overdraft of 60,000.

For the last three months, a customer has been withholding payment, so it has been problematic for us to pay our VAT and PAYE on time and in full.

We need the money to pay wages and our suppliers, but the taxman says it's not our money to spend.

Let's not have a knee-jerk reaction to the credit crunch - just give us time
Martin Sutton
Small business owner
Because the taxman is putting immense pressure on me to pay, I asked the bank to help out with a larger business loan to cover the overdraft, existing loan and a bit of money to help us through the current cashflow problem.

We asked for that six weeks ago, but it hasn't gone well at all, as they said no.

In the past, they've extended loans when I've asked for them.

It would be great if we could have a longer VAT window and more flexibility over PAYE.

I have written to the Chancellor, Alistair Darling, saying there must be a better way than shutting us down and putting 11 people out of the work.

We're just behind, so either give us more time or get banks to extend banking facilities in the meantime, especially for companies like mine that have been going for a fair amount of time and have paid a lot.

It just seems a bit short-sighted - plus we have people coming in and wanting a bargain!

Let's not have a knee-jerk reaction to the credit crunch - just give us time.

Ally Gibbs
Ally says banks say 'no' before they even know what she's asking for

Ally Gibbs runs a small gift-shop with massage and reflexology therapy rooms in Burgess Hill in West Sussex.

She opened Enchanted six months ago, investing a lot of her own money. But when she recently wanted to increase cashflow for Christmas stock, her bank turned her down.

When I opened the shop, I put in a lot of money and managed to secure 10,000 from the bank at the last minute, after quite a struggle.

Since then, I haven't borrowed anything, although things have slowed down as we have been hit by less spending, just like other shops.

When I telephoned the bank for an overdraft, just to help with the cashflow for Christmas stock and everyday bills we have coming in, they rejected me out of hand on the basis we haven't been going for 12 months yet.

The banks need to take time to listen and treat their business customers as customers. At the moment, it feels like they're working against us
Ally Gibbs
Small business owner

I hadn't even said what amount I had wanted.

When I queried it, as they didn't know the details of my request, they said: "There's a credit crunch going on. We're not lending to anybody in your position."

I was surprised - how are small businesses supposed to survive?

As a small shop owner, I find that in any conversation about finances with banks or others right now the door is firmly shut in your face.

People are not prepared to talk to you before they've already said "no" straight away.

No one's listening, you're on your own, so I'd like more flexibility in the system.

The banks need to take time to listen and treat their business customers as customers.

At the moment, it feels like they're working against us.

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