Credit conditions are 'big issue' for small businesses

By Nick Servini BBC Wales business correspondent

New Welsh Labour leader Carwyn Jones is talking of a "community bank"

Ask anyone running a small business in Wales about the big issue for them in the recession and they are likely to tell you it is the tightening up of credit conditions.

It is easy to see why feelings have been running so high.

Company bosses have seen the taxpayer bail out the banks and then many of them have not seen that generosity returned at critical times for many firms.

It has been virtually impossible to find out what the lending levels have been for Wales because the banks do not break up their figures in that way.

So the assessment by Professor Colyn Gardner from Bangor University, a former investment banker, to the latest economic summit in Aberystwyth is the closest we have to a definitive account of what is going on.

It will come as no surprise to many people that he believes there is a gap between what companies want and need, and what they are getting from the lenders.

If this is the case then it will obviously be hindering hopes of an economic recovery.

There appears to be no difference in Wales than any other parts of the UK.

The latest all-Wales economic summit examines rural communities Focus on rural economy and banks

Where Wales is at a disadvantage is the reliance on small firms.

Larger companies tend not to have the problems getting access to money and Wales has few headquarters of large firms.

So what are the issues? Typically they revolve around difficulties obtaining new lending or increases on existing facilities.

One of the most common accusations against the banks from groups like the Federation of Small Businesses has been that they have a "computer says no" attitude.

Professor Gardner agrees that more decisions should be made locally by staff with a flexible attitude instead of referring decisions to staff in London operating in a formulaic fashion.

In defence of the banks, they are stuck between a rock and a hard place.

The public wants them to lend more while the government is telling them to build up their balance sheets.

Alternative sources

Professor Gardner is adamant that pointing the finger at bankers in Wales is pointless because they were not to blame for the reckless practices.

He tells one story of how a banker in Wales has even stopped going to his local rugby club because of the abuse he has been getting.

No-one is pretending that lending conditions are going to get easier any time soon so the future for many firms may well be finding alternative sources of funding.

This is where the politicians could step in.

Both Carwyn Jones and Ieuan Wyn Jones have talked about the prospect of some form of community bank being created.

Expect more flesh on the bones in the new year.

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