Mr. John Trethowan:

It is a major problem. In the good times cash was plentiful, loans were easily got and the reserves of some good businesses were put into buy to let properties and extra borrowing was taken to buy more. We ask companies with a guarantee or single sole traders for a statement of assets from the promoter of the business. During the office's first years we routinely saw a portfolio of buy to let properties whose values were under water as against what they were bought for and which had lending against them whereby the repayments were more than the rental income. Instead of having liquid reserves which could be brought into the business when needed these reserves were stuck in fixed assets which had declined in value and were sucking cash out of the business.

The second scenario, for which I have much more sympathy, is that prior to 2008 many businesses were growing strongly and required new premises or showrooms and they invested to meet the demands of the market at the time. After 2008, when domestic demand collapsed and Government spending decreased, they found the value of the loan was the same but the property had halved in value and their turnover was down and so they found themselves in difficulty. We still find this today with quite a few businesses which are trying to recover from this hit on their capital. This is exacerbated by the banks which are exiting because they crystallise the situation in asking for refinance. They are getting some write-downs but the proprietor must try to find a bank to take on the business. We are finding it extremely difficult to get some of these businesses refinanced.