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Surgery loans... don't bank on it

Long long ago, in a galaxy far away (well 1988 actually) I started my accountancy practice. To do so, I needed a loan of £50,000 and I approached my then bank manager, Mr Viney of HSBC.

We had just moved house, my daughter Gemma had just been born, and I had no security to offer, but Mr Viney my manager at the time, looked me up and down, asked me some questions and gave me the loan. It proved to be a good decision, I still bank at the same branch, and I am sure they have made their money back many times over.

How times have changed. I got an email from a client earlier this week. They have a practice loan with a now notorious high street bank. There have been four partners, but one of the partners has left and the remaining three are taking over his share of the loan. Like many surgery loans, the bank lent them their money at 1% over base. The original response from their bank was to tell the partners that they would not allow the remaining three to take over the leaving partner's loan. Instead, a whole new loan would be required with a range of rates from 2.5% to 3.5% over base and an arrangement fee to boot.

After some negotiation, the bank have agreed that only the part of the loan that belonged to the leaving partner would have the rate revised. According to my client, the bank are taking this approach as they are worried about the risk attaching from the reduction from four partners to three. Is this reasonable? Well, in more than 20 years I have seen lenders worry when the number of GPs falls to less than two, but three from four? I don't think so. This is a modern building, this is a good healthy practice and the security is the rent.

It all smacks of an opportunistic approach by the bank to make some extra dosh at someone else's expense. Does it plant the foundations for a long and happy association between the bank and the customer? Do we think that the practice will have any allegiance to their bank?

I suggested that the practice ask the bank to confirm that they will reinstate the 1% over base  when they go back to four partners, and we wait to hear their response but I for one am not holding my breath.

I know these are difficult times, but these difficult times were not caused by this kind of professional lending. If the banks want to show they are serious about helping their customers, forget the expensive nausea inducing advertisements, and start building sound long term relationships. Please come back Mr Viney, your industry needs you!

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