Scottish entrepreneurs 'don't trust banks'

MORE than 60 per cent of entrepreneurs still do not trust their banks following the financial crisis and ensuing tightening of lending, according to a survey.

Only 28 per cent of businesses said they had been able to secure funding from their banks, with 45 per cent instead turning to friends or family to secure money to start their own firms.

In a survey of more than 1,000 small business owners, 22 per cent said they had turned to other financial institutions - such as building societies or credit unions - to fund their companies, while 5 per cent approached business angels.

Ceri Rogers, who is organising this week's New Start Scotland business start-up event in Edinburgh, commissioned the study.

She said: "Firms of all shapes and sizes have been struggling to raise bank funding on acceptable terms for far too long. However, fledgling entrepreneurs have been the hardest hit.

"Many new start firms require only small levels of investment. It is crucial they receive the right level of support."

Shaf Rasul, one of the "dragons" in the online version of BBC2's Dragons' Den, said: "Entrepreneurs will drive Scotland out of the recession. But while the opportunities today are much better than they were ten years ago, it's going to be another year of battening down the hatches."

Rasul, who will deliver the keynote address at the New Start Scotland exhibition, added "However, if you can make a successful business in the recession, imagine what it'll be like when we're out of it. You'll make a fortune when it ends."

IT and property entrepreneur Rasul teamed up with Duncan Sutherland, the former chief executive of Moss Bros, last year to open the first branch of discount chain BigOffers in Edinburgh.

New Start Scotland - which takes place on Friday and Saturday at the Royal Highland Centre - is running its own version of Dragons' Den, with entrepreneurs competing for 30,000 of business start-up support, including 5,000 in cash.

News of the lack of confidence in lenders comes as banking giant HSBC yesterday unveiled more details of its plans for expansion in Scotland, as it aims to lure dissatisfied customers away from other lenders.

The bank aims to double its number of branches north of the Border to 12 this year through a 9 million investment.

HSBC confirmed it will create more than 100 jobs in the expansion, under which a branch in Stirling will open this summer.

The lender also plans to open a branch in Dundee and a second outlet in Aberdeen and is currently looking for sites in Falkirk, Dumfries and Hamilton.

The announcement comes just a month after John Rendall, chief executive of HSBC in Scotland, told The Scotsman that he was "confident" that the bank was gaining market share north of the Border despite only 5 per cent of businesses changing their bank each year.

Rendall, who was appointed in June 2009 to grow HSBC's Scottish business, admitted the process of recruiting clients had been "longer than we might have thought".

Commenting on yesterday's announcement, Rendall added: "This significant investment underlines HSBC's confidence in Scotland, its businesses and its people. Our growth strategy is focused purely on opportunity and demand.

"Over the past year, we've increased our lending, increased our small business and personal banking customer base, and experienced an uplift in demand for our services."