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Writing an appeal

An appealing process

Professor Russel Griggs OBE is heading up the UK's banks’ Lending Appeals process, which allows SMEs to challenge lending decisions. He shares his insight on the business banking relationship

After the economic crisis, the Government formed the Business Finance Taskforce to help ensure that action was taken by the banks to help UK businesses to thrive and grow. Part of this involved setting up the UK's banks' Lending Appeals process to enable SMEs with up to £25 million turnover to challenge finance decisions and potentially have them overturned. Professor Russel Griggs OBE has been tasked with the role of Independent External Reviewer – a neutral third party sitting between the banks, government and industry to ensure the process is achieving its aims and being managed correctly. Through his examination of the lending appeals he has also gained a unique view on the relationship between businesses and their banks.

He says: “In the two years since the Lending Appeals process was put into practice, we have seen 5,500 appeals across all the banks and put £30 million in lending back into the economy. I help make sure that the banking process is transparent and that the resulting decisions are good ones.”

So far, on average, 40% of initial lending decisions have been overturned, with credit cards accounting for 30% of the total appeals. “The bulk of appeals are coming from the smaller end of lending,” says Professor Griggs, “but we are also seeing businesses appealing lending decisions worth millions.”

Credit scoring and affordability are the main reasons for lending being initially declined and Professor Griggs is emphatic that SMEs seeking lending should be as prepared as possible to give them the best chance of gaining finance. “The more information you provide to your bank, the more likely the resulting decision will be a good decision, whether it is a ‘no’ or a ‘yes’. A good decision is better for the customer as well as for the bank.

“If you give your business plan to your bank, they will assess it and base affordability on facts. You might think you can afford the lending you are seeking but, if this isn’t the case, you need to know.”

An important issue to keep in mind is that for new, non-registered businesses, your bank will check the credit score of you as an individual before considering the scope of your business, Professor Griggs explains.

To raise awareness of this, a credit scoring leaflet has been developed, highlighting the need to prepare yourself before asking for business finance. Adds Professor Griggs: “If you have a poor credit history, you can have the best business plan in the world, but you might not get the lending you are looking for. It is important to be honest, to explain the reasons behind the numbers. Be as open and transparent as possible, gather as much information as you can and most importantly, talk to your bank manager – keep them informed.

“I strongly believe that the most important thing banks and customers can do is to talk to each other. Highlight any issues with cashflow in advance, so your bank can set things up to help – don’t wait until the problem is already affecting your business. Managing this dialogue is more important now than it ever was.”

For more information on the Lending Appeals process, speak to your local Santander Relationship Director.

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