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Asian businesses face tough
times in credit-hit UK
By Venkata Vemuri
Indo-Asian
News Service
London,
Oct 19 (IANS) Tina Sawhney, an Indian-born British businesswoman
who owns flats she gives out to rent, has been told by her
bank to repay the loan given to her by this year-end. During
the interim period she has either to get another mortgage
or face repossession of her flats by the bank in case on nonpayment.
Her
loan of ?160,000 is secured on a building valued at ?690,000
last year. "I have a long track record with the bank,
I've owned the building since 1991 and I've never missed a
single mortgage payment. The manager told me I was a great
customer but that the bank had taken a commercial decision
not to do this."
Sawhney
is not too sure of getting a new mortgage. "I keep bursting
into tears about it. It's heartbreaking to think about the
possibility of being repossessed. My tenants will be on the
streets if this happens."
Restaurateur
Asad Khan finds himself similarly left in the lurch. He owns
two Indian restaurants and his bank agreed to finance him
?280,000 for a third site for his chain called India Dining.
He even signed contracts with his bank. However, the bank
backed out at the last minute.
He
said: "They started asking us to show them we could service
the loan. We showed them the profitability of the other two
restaurants but they told us they no longer wanted to support
projection-led lending. They were treating the lending on
the new premises as start-up funding even though we had a
track record of growth and profitability."
Khan
has now taken a bridge loan at a heavy interest and is looking
for a private investor to enable him to pay back the bridging
loan and continue his expansion.
The
Times on Sunday has highlighted the cases of two Indian-born
businessmen to illustrate the dire straits the latter find
themselves in. The government has assured to step in to save
small Asian businesses from ruin with the crunch-hit British
banks demanding their loaned money back and refusing new loans.
Reeling
under the credit crunch, many banks are either cancelling
loans extended to small businessmen, backing out of new loans
or reducing overdraft facilities.
William
Flatau, owner of the commercial finance brokerage First Finance,
is not optimistic about the outlook for small firms that need
cash. In many cases the banks are not telling businesses in
distress that they are pulling their support.
"Instead
they are stealthily reducing their overdrafts. If a company
gets a big payment of ?30,000 in, they will reduce the overdraft
facility from ? 50,000 to ?20,000. Practices are getting quite
a bit sharper in this environment."
In
response to the funding crisis, the minister for competitiveness
and small business, Baroness Shriti Vadera, is quoted by The
Times on Sunday as saying that she will help restore lending
to small firms and to make government departments, local authorities
and the NHS pay smaller suppliers promptly.
The
Baroness said: "Across the government, this department
and the national economic committee, we are very focused on
this issue. We understand what these companies are going through
and we are doing everything we can to help."
Indo-Asian
News Service
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