banks strangling UK businesses

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banks strangling UK businesses

 
I write more in an attempt to vent my spleen at the small minded, cossetted people within the banking sector, more concerned about their own little world, whilst alledgedly trying to help this country back on its feet (all the while looking at how big the next bonus cheque will be!!!), who are merely paying lip service to the government, their officers and MP's in general.
 
My expectations are now so low that I don't even expect a response to this e-mail.
 
I am moved to writing through sheer frustration, dissappointment and finally despair.
Three words that probably don't really scratch the surface of my true emotion but hopefully convey the message that as an owner director of a British manufacturing company the total lack of support from the recognised financial sectors will strangle what life is left within British Manufacturing.
 
We are a small family business that manufacture a range of products for the colouring of plastics. We operate from Wrexham in North Wales, employ 10 people directly, and have an annual turnover of £700k.
We took on the business in February 2009 having acquired the interests of a previously failed business on the same site, thus safeguarding the 8 jobs at the time. We have since expanded the workforce by 2 full time and 1 part time.
 
So we are under no illusions, we are acutely aware that the business is under capitalised, and effectively we have been financing our growth to date out of personal finances and cashflow.
 
Businesss has been exceptionally hard, and we feel we have done an exceptional job in first maintaining the business, and then growing it.
 
We now find ourselves with a number of real opportunities to further expand the business. Without going into great detail we could increase our business 10 fold in 12-18 months-maybe less!!, increase dramatically our profitability, increase our workforce, and improve the environment through reduced landfill initiatives and biodegradable products.
The alternative is we run out of funding and the business folds.
 
The "cost" of moving this business from where it presently sits to a potential global player is less than £150k. This funding would be for machinery and working capital.
For various reasons we as directors do not possess the ability to raise that sort of money personally, so we applied to our bank for assistance to purchase capital equipment via their asset finance arm. This was turned down.
 
We then applied for funding via the Enterprise Finance Guarantee scheme (EFG).
Having jumped through the various hoops the bank declined it.
We challenged it and it was declined again.
We appealled to the banking gods and again it was declined!
 
The amount had been reduced from £150k to £75k and then to £60k at the final attempt to gain funding.
As we understand it Government backs the EFG lending bank up to 75% of whatever it lends. Therefore in this case the bank exposure was £15k for which they take personal gurantees from us as directors and a debenture, and still it was declined!!!
 
We are now seeking alternative funding through other finance options such as Finance Wales. However, the whole process of the EFG has left us wondering if anybody actually receives funding via this system?
Our bank said "If you had £50-60k we would possibly match it...no gurantee." Our response "if we had that sort of money we wouldn't need the bloody bank!"
 
Thanks for taking the time to read my rant (If I didn't get spammed)
 
Regards,
 
Nick Smith
Commercial Director
Technical Colour Supplies (UK) Ltd
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