Monday, 31 August 2015

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Cumbrian baker hopes Budget will put pressure on banks to lend more to small firms

A baker who works 14-hour days seven days a week was refused a bank loan to expand his business and get a regular day off.

Stephen Berry photo
Stephen Berry

Stephen Berry runs Berry & Sons Bakers, which has a bakery and shops in Wigton and Silloth.

He took over the business after his father John had a serious climbing accident last year, forcing him to work all week for long hours to fulfil orders.

When he saw an opportunity to open a shop in Cockermouth and move the bakery to cheaper purpose-built premises at Kirkbride Airfield, he approached HSBC for help.

The 33-year-old said: “We’ve got a business that’s ripe to expand and we’ve had opportunities we couldn’t take because we didn’t have the money.

“The new shop would have increased turnover by £70,000 to £100,000. It would have brought us a healthy profit margin.

“I went to HSBC in Wigton for £10,000, which was sensible based on our profits. I showed them the business plan and cashflow forecasts.

“Staff at the branch said it was a good idea but they had to ask a computer in Birmingham – the computer said no.”

The expansion would have created new jobs and enabled Mr Berry to take some time off to spend with his wife and baby each week.

He believes the bank loan process didn’t consider his firm’s unique circumstances and says many other small businesses are coming up against similar funding barriers.

And he hopes Chancellor George Osborne’s Budget next week will push banks to lend to more small businesses such as his.

Mr Berry added: “Our profit margins were halved last year because of the accident with my dad. This is why I was turned down, the fact the business is doing well now wasn’t taken into account.

I don’t think banks are prepared to invest in expanding small businesses and because I can’t afford the equipment to allow staff to run the business more, I have to be here all the time.

“I don’t get a day off unless we close down – that’s an expensive day off. Just getting some money into the area from banks would make all the difference.”

A spokesman for HSBC said the bank would not comment on individual customers but pointed out that the company had increased its lending to Small and Medium Sized Enterprises (SME) in 2011.

The spokesman added: “Our net lending to UK SMEs grew by four per cent year on year in 2011, despite the UK market shrinking over the same period by six per cent.

“We have also made a commitment to look to lend even more to viable UK SMEs in 2012 than in 2011 and will look to approve at least 80 per cent of applications for finance from strong, viable SMEs. Lending decisions are not simply made via a computer.”

She added that all factors were taken into account when making a loan decision.

Live coverage of next Wednesday's Budget on this website

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