London Colney business hit by hike in bank’s interest rates
PUBLISHED: 06:35 09 May 2011 | UPDATED: 08:47 11 May 2011
A THRIVING business has said crippling interest rates on a bank loan is stifling its growth.
Premier Deep Hole Drilling in London Colney has grown by 25 per cent in the last year but the recent hike in interest rates on a loan taken out before the recession and a reduction in the amount the company can borrow is hindering expansion and leaving its overseas competitors to take advantage of export opportunities it can’t.
Managing director Stuart Grant took out the £1.8 million business loan in 2007 – a time when banks were falling over themselves to lend to him – but the repayments have now been dramatically increased.
Mr Grant, who scaled back his staff to 23 during the recession but now employs more than 30 skilled workers from the local area, said that the additional money the company now needed to find on the loan would have paid for two more local employees.
He continued: “In general terms, we have been lucky. Many companies have sat in difficult positions for many years. It’s been very tough but we have supported people as best we can. Over the past nine to 12 months there has been a big change in the economy and there are a lot of opportunities for manufacturers out there.
“But what we have found is funding from the banks is becoming increasingly difficult. We have had our two main sources of funding and on both of these we have had the negotiated rate put up and the percentage we can borrow has been reduced.
“Without financial support it is very difficult to grow. And my competitors are not in this country.”
After hearing about Mr Grant’s situation, MP Gavin Shuker, the shadow minister for the environment, paid the company a visit last week on the election campaign trail and was joined by former Labour MP for St Albans, Kerry Pollard. He said he wanted to see more being done to get banks lending and support British manufacturing.
Mr Shuker said: “This is a really great business and like many it’s in a position it could do with more life in the economy, a problem we have been talking about more than anything today.
“Premier is a solid business, a little gem of a business in the heart of the community. This business is poised to grow but it is being restricted by this situation, which is very different to a business in decline. The government should be using its abilities to get these banks lending. We have massive share holdings in some of the biggest culprits.”
He added: “The reason we are in this situation and we have experienced a recession around the world is the banks – they took big risks that didn’t pay off and we had to bail them out. They took massive risks before the recession and it’s almost as though they can’t judge the appropriate level of risk for businesses like Premier.”
Mr Pollard said businesses such as Mr Grant’s were key to maintaining the vitality and vibrancy of St Albans because of the money it brought to the local economy and the employment opportunities it provided.