The small business support and lobby group believes some banks may be automatically refusing loans to firms in the industry due to misplaced fears over their viability.
The issue was given heightened exposure yesterday (16 July) when Business Minister Ian Lucas admitted that he was well aware of the problem. Mr Lucas made his remarks in response to Lib Dem MP Greg Mulholland during oral questions in the Commons. Mr Mulholland said pubs were not receiving credit from banks and asked Mr Lucas to look into it.
The FPB is concerned that the entire sector may have been classed as high risk by certain lenders. As a result, it is thought they have effectively imposed a blanket policy of not providing pubs and restaurants with loans, rather than looking into the viability of each business on a case-by-case basis.
Several FPB members operating licensed premises have recently been denied overdrafts and loans by their banks and believe the decision was made purely because of the type of businesses they operate.
FPB National Chairman Noel Guilford said he believed several major banks had effectively imposed a blanket ban on lending to new customers operating in the pub and restaurant sector. He also believes they are trying to reduce their exposure to existing customers.
He said: “The banks’ attitude to small businesses in the hospitality sector is disgraceful.
“Most of these restaurant and pub businesses are viable and will survive but need help over the next few months. We have evidence that banks are taking a negative blanket approach to this sector which is directly against what the Government is saying they should do.
“I call for the Government to intervene as a matter of urgency to avoid huge job losses in a sector that is vital to the economy.”
