Small businesses facing big hurdles to banking

Suomen Yrittäjät, the Finnish SME association, demands the law on basic banking services be changed. The association wants banks to be obliged to offer basic banking services to businesses, associations and sole traders.

On 1 March, the finance ministry published an assessment report on banks and credit institutions. The report found that many businesses face significant problems in accessing banking services. Businesses say these include opening accounts, limitations to services, and accounts being closed.

Micro and small businesses bear the brunt of these problems, and in particular businesses whose owners have an immigrant background. The report found that problems accessing banking had become a lot more widespread in recent years.

Problem reflected in consultation

Suomen Yrittäjät has been seeing the problems in accessing banking services for some time. They have been reflected in the higher level of enquiries to its consultation services. Business owners have told the association they cannot become customers or open an account in any bank.

The enquiries show three major reasons for being denied banking services. A person in charge or part owner of the business has a payment default record, the business owner has a foreign background, or the business trades internationally. In addition, businesses operating in several countries have seen their customer relationships in Finland cut off without explanation.

Suomen Yrittäjät is glad the finance ministry’s report recognizes the growing problems small businesses face when trying to access banking services. To solve the problem, Suomen Yrittäjät demands the law on basic banking services be changed. The association wants banks to be obliged to offer basic banking services to businesses, associations and sole traders.

“The ministry’s findings match the findings of Suomen Yrittäjät, which show that small businesses are finding it increasingly difficult to open accounts. Businesses cannot become customers or open accounts in any bank. A business owner’s foreign background (non-EEA, and now increasingly also EEA citizens) has become an even more categorical barrier to basic banking services,” says Petri Malinen, an economist at Suomen Yrittäjät.

“In addition, internationally active SMEs are threatened with having their banking services cut off if they do not stop doing business in third countries. What’s more, banks refuse to offer services because of a single part-owner’s potential old, personal payment default record,” Malinen says.

“Can put a company out of business”

Malinen says the current situation is that small SMEs find it extremely difficult and even impossible to get basic banking services.

“At worst, this means they cannot start trading, and it can even put a company out of business.”

In the view of Suomen Yrittäjät, the problem can be solved by amending the Act on Credit Institutions. The association would like to see its provisions on the right to basic banking services expanded to businesses, associations and sole traders. The finance ministry’s report also says that “considering expansion of the right to basic banking services to businesses, associations and sole traders would be justified”.

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