Zeros and villains

Another interesting figure has emerged that appears to lend weight to the view that banks are not necessarily the villains of the downturn (not the only ones, anyway).
The British Bankers Association, which represents the High Street banks, has released details of the amount of money banks loaned to small firms towards the end of last year.
The figures show that small firms received more money from banks in October and November 2008 than they did in 2007.
This tends to suggest claims that banks have turned the tap off for business lending aren't true.
It also mirrors the quarterly economic survey carried out by Derbyshire and Nottinghamshire Chamber of Commerce, which said only 18% of firms surveyed had experienced problems accessing finance in the three months up to December.
The BBA's statistics director, David Dooks, makes an interesting observation, though: "Loan demand is slowing, and small businesses are using their cash flows for working capital, rather than seeking credit options."
What that means is that firms are raiding their own reserves if they need to spend money rather than asking the bank.
Why? Because they wonder whether they'll be given the money, because banks have been increasing the fees and charges on loans and overdrafts, and also because some small firms have been careful enough with cash to have a cushion.
To quote Paul Maloney (pictured), who chairs the Federation of Small Businesses in Nottinghamshire: "People are more nervous about going to the bank and asking for money because they think they will be told no.
"They are putting things on their own credit cards or taking money out of the business or not investing at all.
"A third of our members have said that when they have gone for money they have been told 'no' or had their overdraft changed or reviewed."
So that's the reality of the situation.
What the BBA's figures don't make clear is whether certain industry sectors are having more trouble squeezing money out of banks than others – in other words, whether banks are directing their money at safer bets.
You can take as read that they are: construction, property development, retailers, the car industry, hotels and restaurants are all finding it harder to raise money than others.
The BBA admits that lending is slowing. And you wouldn't have seen the Government launch a £20bn loan support scheme if there wasn't a problem.
Another point to remember: much of the money that funded the property and building boom in places like Nottingham came from abroad, with Irish, German and Far East investors putting money into city schemes. There, millions have been replaced by zeros.
The next set of BBA figures may tell a different story.