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Banks 'are undervaluing business property'
Many companies are having their access to finance restricted as banks are undervaluing their business property, one industry body has argued.
According to the Forum of Private Business, some firms are resorting to unsecured borrowing, as financial institutions are giving downbeat valuations of their commercial property when using them as security against debts.
However, the British Bankers' Association has disputed the claim, with a spokesman telling the Daily Telegraph "there are bound to be different views on how much a property is worth" during an uncertain economic climate.
The individual added "banks do not lend against security alone", stating they will be looking at the overall ability of the company to make loan or mortgage repayments.
According to the news source, banks use independent valuers to ascertain the worth of a property, but can inform them to set the price based on different methods - such as the timeframe in which the sale of the office or factory will be completed.
Andrew Cave of the Federation of Small Business recently called for banks to work with small enterprises, saying a level of trust needs to exist between the two parties.
Posted by Tom Baker
According to the Forum of Private Business, some firms are resorting to unsecured borrowing, as financial institutions are giving downbeat valuations of their commercial property when using them as security against debts.
However, the British Bankers' Association has disputed the claim, with a spokesman telling the Daily Telegraph "there are bound to be different views on how much a property is worth" during an uncertain economic climate.
The individual added "banks do not lend against security alone", stating they will be looking at the overall ability of the company to make loan or mortgage repayments.
According to the news source, banks use independent valuers to ascertain the worth of a property, but can inform them to set the price based on different methods - such as the timeframe in which the sale of the office or factory will be completed.
Andrew Cave of the Federation of Small Business recently called for banks to work with small enterprises, saying a level of trust needs to exist between the two parties.
Posted by Tom Baker
Mon, 23rd Aug 2010