“We needed looking after for the first four months of the
year and the banks just didn’t want to play, not without me giving
horrendous personal guarantees that I wasn’t prepared to do,” said
Worrall Thompson said sales at the restaurant chain began falling last autumn, when the financial crisis intensified.
Worrall Thompson said Lloyds had asked him to put up his own house as security, a risk he declined to take.
Thompson, who will keep running the Kew Grill in south-west London and
the Windsor Grill in Berkshire, warned that small businesses would
continue to suffer through the downturn unless banks lent more readily.
Whilst here at Business Matters we are in no way making light of Worrall Thompson’s position, but long before the credit crunch was every invented as a financial phrase banks have required guarantees and appropriate security against their liabilities.
A brief survey amongst some of our readership conducted by Trends Research highlighted the fact that 64% of the business owners questioned had also had to give security, including guarantees over their own homes, to secure business borrowing dating back as-far-back as 10-15 years ago.
‘There is no such thing as limited liability if you own more than 20% of an SME company looking to borrow and there never has been regardless of how profitable you are’ stated Richard Elton from London, who himself owns a profitable business which needed to borrow £60,000 five years ago requiring him to allow the bank to take a second charge over his family home.’
‘I didn’t want to go forward with the second charge, but we were a normal company in a leased office and not being in manufacturing meant that we didn’t have any plant to offer the bank as security, so i had to offer the house. It was limited to a reducing sum and i knew the risks, but it was either that or nothing.’ Elton added
Have you been in this position? Are you sympathetic to Worrall Thompson’s plight or surprised like many business owners at his amazement at the normal process?