ACS

The banking industry has announced measures to help small business customers in difficulty during the economic downturn. Banks has come under intense government pressure to pass on cuts in interest rates and help firms who may be running into trouble. In response to this lenders have revised their guidelines for dealing with these small business customers, after consultation with the Department of Business, Enterprise and Regulatory Reform (BERR). However the new guidelines put the onus on small businesses customers to ask for help early. The Guidelines, published by the British Bankers' Association (BBA), also stress that banks will not be able to support businesses that cannot survive.

The BBA said the main changes to the guidelines, first published in 1997, were:

• pro-active contact by banks if they think firms might be in trouble
• banks to offer to discuss all concerns in person
• banks will look to use business assets as security before they consider personal assets as security
• business account switching within 5 working days
• banks helping customers to revise their business plans and forecasts during the recession if necessary.

Last month the government set up a panel to keep an eye on the way banks lend to small businesses during the impending recession. It will be made up of officials from the Treasury, BERR, and the Bank of England.