SFLG: banks’ investment criteria must be transparent

More subscribers of TheChilli are continuing to send in their experiences with SFLG (the small firms loan guarantee – see original report here, and some of the follow up from subscribers previously here). Here is one of the latest submitted by William E. (Bill) Smith, managing director of Myzan.

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“We have been in existence now four years funded by personal profits from another venture. I too have just been turned down again under the SFLG Program – this time by Barclays in Bromley, after being rejected by NatWest in Charing Cross. Each time they have told me that in their opinion the business does not stand up to their bank’s investment criteria – which they would not define.

I am 55 years old; have an MBA and C.Eng; have a vast amount of experience and contacts in software development around the globe having been Microsoft’s European marketing manager for finance; I was nominated Canadian entrepreneur of the year in the nineties; I have taken two companies from the basement at the university to being successful public companies in North America; I have a business plan which is world class in the opinion of all our many advisers; For 20 years I have owned a large travel agency in Canada employing 20 fine professionals; I own Thames waterfront property in the UK and water-front in Victoria, Canada; I am willing to personally guarantee any loan. Our three products are market ready and getting more and more interest by the day.

I was turned down for £250,000 (under SFLG Program) from Barclays with no meeting offered - and only the comment to our CFO that the proposed business did not meet the bank’s normal investment criteria. The main issue explained to my CFO was that we did not seem to build up any assets from our profit!

I am seriously thinking of moving my whole team to British Columbia where we will get grants as well as loans.

I suggest the following action plan: the banks must be forced to clearly define the key measurements which they use when a request for a SFLG-backed loan is received. Then they must return to the company/entrepreneur a completed 1-2 page report showing these measurements.”

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© Chilli Publishing Ltd 2004

12DEC2005