Money, money, no money

About ten years ago, when one of Mole Graphics’ largest customers went bust, owing us a shedload of money, I spoke to the bank about a loan. They were polite and enthusiastic until they ran the figures. We were not, they said with a tinge of regret, eligible for a loan unless I could persuade two of our other large customers to confirm, in writing, that they would continue to buy print from us for the next five years. I tried to explain that I could probably get these letters but, given that many print buyers changed jobs every couple of years, they would be essentially meaningless.

They accepted this point and rejected my application for a loan. They were very nice about it and when, at the end of our discussion, one of them asked: “Is there anything else I can help you with?” I managed to resist the temptation to point out that they hadn’t helped me with anything at all. It reminded me of Mark Twain’s definition of a banker as a “fellow who will lend you an umbrella when the sun is shining but wants it back the minute it starts to rain.” Mole Graphics struggled on regardless, buoyed by a mysterious, unexpected improvement in cashflow and, excepting the pandemic, I’ve never had to ask for a loan since.

Which is just as well because one of my old friends in the industry recently had a similar experience suggesting that despite the veneer of technological sophistication, bank practices have hardly changed. We all compete in a digital marketplace but bankers’ mindsets remain thoroughly analogue.

In June, I noticed that HSBC (not my bank) announced a £15bn fund to grow the British SME sector. It sounds promising although, over the years, I’ve heard many similar pronouncements. Besides, in 2022, the figures show that bank loans and overdrafts to SMEs declined by 18% to £18.4bn. As there are said to be 5.5m SMEs in the UK, that amounts to about £3,300 for each one - not a lot of help for a sector that is supposed to be the driver of economic growth is it?