Banks refusing loans to all restaurants and pubs, says business forum

By Becky Paskin

- Last updated on GMT

Related tags: Hospitality sector, Debt, Business

Many pubs and restaurants are being denied bank loans
Many pubs and restaurants are being denied bank loans
The Forum of Private Business has raised concerns that banks are implementing blanket bans on lending to pubs and restaurants over fears they may collapse

Some banks may be unconditionally refusing to provide loans to small restaurants and pubs over fears that businesses in the sector may collapse.

The Forum of Private Business (FPB)​ has raised concerns that banks are imposing a blanket ban on lending to some businesses in the hospitality sector, rather than looking into the viability of each one on a case-by-case basis.

FPB National Chairman Noel Guilford said the hospitality sector could be at risk if banks continued to deny them credit.

“The banks’ attitude to small businesses in the hospitality sector is disgraceful,” he said. “Most of these restaurant and pub businesses are viable and will survive but need help over the next few months. We have evidence that banks are taking a negative blanket approach to this sector, which is directly against what the Government is saying they should do.”

Rodizio Bar and Restaurant​ co-founder Paul Bates was one person who recently found himself denied a bank loan to expand his business, despite successfully developing the enterprise to three sites in less than a year.

“We’re looking to expand further now because you’re going to get the best deals on property and building work you’re probably going to ever get at the moment. And out of all those markets out there, the leisure markets are actually doing well.

“I’ve also put £700,000 of my own cash into the business – they know all this, and yet they won’t help because we’re in the bar and restaurant sector. I just don’t understand it at all and I’m infuriated about it.”

Business minister Ian Lucas yesterday admitted he was aware of the problem, after Lib Dem MP Greg Mulholland asked him to investigate the matter during oral question time in the Commons.

The FPB is now calling for banks to review loan requests on a case-by-case basis, instead of automatically refusing credit to businesses perceived to be high risk.

Related topics: Business

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