There’s nothing more demoralising or agonisingly annoying than hearing the word ‘no’ from your bank.
What to do? Silently walk away shaking your head as you unceremoniously put your Business Plan in the nearest bin or do you decide to fight back because you feel your bank has misunderstood the opportunity?
If you’re a fighter, and you genuinely believe the bank has got the decision wrong, there is a way to get the bank to re-look at your request. Yet despite there being a formal appeal process many business owners don’t realise that such an avenue exists.
The Origins of the Loan Appeal Process
Back in 2010, during the depths of the credit crunch, the government spearheaded the formation of the Business Finance Taskforce. Made up of all the major banks the aim of the taskforce was to come up with actions to make access to finance easier.
One of the 17 actions was that each bank was required to establish a formal Loan Appeal Process whereby businesses which felt that the ‘no’ from their bank was unfair had a route to ask that their application be re-considered.
Who Can Appeal?
There are three key eligibility criteria which have to be met before a lending application appeal can be launched:
1. The company’s group turnover must be less than £25 million
2. The appeal must be made within 30 days of the decision being communicated
3. No previous appeal requests have been made in respect of the same application
The Appeal Process
If you have satisfied the eligibility criteria and you wish to appeal the decision you can request details on how to proceed directly from your bank, either via your Relationship Manager or by searching on the bank’s website.
Alternatively you can visit the Better Business Finance website and fill in the form with all your key details.
Once your appeal is lodge an independent team, which was not involved in making the original decision, will review your application. In carrying out the review of the original decision they may contact you for further information or clarification on certain points.
Typically the bank has to get back to you with an answer within 30 days of you lodging the appeal.
How Successful Has the Initiative Been?
In requesting each bank to establish its own Loan Appeal Process it was realised that the banks needed to be held to account to ensure the process was robustly implemented.
To fulfil this role Professor Russel Griggs an external, independent reviewer, was appointed to conduct regular on-site and off-site monitoring of each bank’s appeal process. Professor Griggs and his team report on a quarterly and annual basis and his findings have proved to be a useful insight into how banks are dealing with appeals.
Latest Loan Appeal Request Findings
The latest review covering the quarter from April to June 2015 revealed that there were 858 appeals of which 196 were successful. That equates to a 23% overturn rate and resulted in businesses successfully borrowing an additional £1.5m.
But how does the success rate compared to previous years?
In the latest report Griggs notes that in his first review for the year to March 2012 the overturn rate was 40% compared to 23% in the last quarter. On first glance it would appear that the banks are going backwards with fewer successful appeals. However, Griggs explains this apparent slippage by saying that the banks are now better at weeding out marginal applications early on by providing more proactive support. The outcome of this is that those applications which make it to appeal are more marginal and hence the overturn rate is declining.
So if you are at the receiving end of a rather blunt ‘no’ from your bank, and you feel that the decision is wrong, take control and start the loan appeal process.
Hi Rob, it was so interesting and entertaining listening to you at the Kevin Green Wealth Coach Workshop in Reading this weekend! I didnt realise you can find Finance proposals such fun!. Brilliant tips! Thanks.
Further to your recent presentation at LEAD Wales just wanted to say it was very refreshing to see somebody talk passionately and positively about finance, very insightful!
I wanted to thank you for such an insightful, energetic, and entertaining talk at the Kevin Green Wealth event on securing funding and creating a successful plan. It was brilliantly executed and a pleasure to listen to and the ideas I’ve learned are definitely going to help me in going forward.
Rob delivered a series of 3 workshops aimed at understanding how finance houses look at finance propositions with the aim for us as a team to deliver more of a bespoke offering to our customer base. The training was delivered to a mixture of staff who work with new businesses start-ups and existing established businesses across Mid & South West Wales. Rob delivered the training with an abundance of passion and has really helped my team look at financial propositions in a different light, many thanks again Rob and I look forward to work with you in the near future.
Rob kindly agreed to attend the recent Pontypridd RFC sponsors networking evening and delivered what can only be described as an excellent talk on 5 Tactics to Boost Your Business and Your Profits. He kept the audience engaged throughout and the feedback from everyone was excellent. Rob is very knowledgeable on business and finance and on top of that is a genuine nice guy. We hope to have him back at a future event and I have no hesitation in recommending Rob’s services.