Date of release: Monday, November 11, 2013

From left, Sir Michael Snyder, Senior Partner at Kingston Smith LLP, with Professor David Gray and Professor Mark Saunders The lack of understanding between banks and small to medium sized enterprises (SMEs) when it comes to securing finance has been highlighted in new research carried out by the University of Greenwich’s Business School.

The report, Bank finance - lost in translation, reveals a number of key misunderstandings that can often prevent banks from lending to SMEs. It also shows that, for many small businesses, bank lending decisions are a ‘black box’ of mystery.

Working in partnership with Surrey Business School, university researchers carried out face-to-face interviews with the senior lending policy makers at five major and challenger high street banks, as well as conducting interviews and focus groups with SME owners.

The research, commissioned by top 20 accountancy firm Kingston Smith LLP,  reveals that the fault is on both sides, and that dialogue between them is often lost in translation. Many SMEs, for example, seem unaware of the need to have both a good credit rating and a realistic business plan – and to share the financial risk - when applying for funding.

Professor David Gray, Chair in Leadership and Organisational Behaviour at the university, who is co-leading the research, says: “To increase the chances of a successful loan application, not only must there be a sound business proposition, but the SME must also demonstrate its financial acumen.”

The report proposes a series of recommendations to banks to help bridge the divide, including providing clear details of their loan criteria to SMEs; outlining how different factors, including credit history, will impact upon their decision-making process; and providing clear, constructive feedback on loan decisions.

For their part, SMEs are encouraged to prepare realistic business plans and seek expert feedback before they are submitted; to be aware that banks’ lending portfolios will focus on different sectors at different times; and to demonstrate financial acumen over a number of years, among other recommendations.

Professor Mark Saunders of the University of Surrey, who also co-led the research, adds: “Our findings highlighted the need for clearer and more detailed information flows between the banks and SMEs. While SMEs need greater clarity about the process by which banks make their lending decisions, they also have to keep in mind that loans are made on a commercial basis.”

A copy of the research report, containing further key findings and recommendations, can be downloaded from Kingston Smith’s website at

To find out more about studying at the University of Greenwich’s Business School:

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Picture: From left, Sir Michael Snyder, Senior Partner at Kingston Smith LLP, with Professor David Gray and Professor Mark Saunders at the launch of the report.