Last year, the UK’s five largest banks agreed to lend £190 billion to UK businesses in 2011. By the end of the third quarter, they had lent £157.6 billion, which put them ahead of the target. However, only £56.1 billion of that was made available to SMEs, slightly below the small business lending target.
A British Bankers Association spokesman recently said that the Project Merlin banks are on course to meet their lending targets and their performance over the first three quarters shows that they are committed to helping businesses grow despite weak demand and the challenging economic environment.
On the other hand, FSB spokesman Andrew Cave, says lending conditions for small businesses have deteriorated since Project Merlin commenced. Lending has actually decreased whilst the cost of borrowing has gone up, he explained.
Chris Leslie, the shadow Treasury Minister, also pointed out that Project Merlin does not lay down conditions regarding the cost of small business loans. It’s fine to say the banks are offering loans, but not if they are so expensive companies cannot afford to take advantage of them.
In order to meet the small business lending target, the Project Merlin banks should have lent 19.9 billion to SMEs in the final quarter of last year. The Bank of England will be publishing figures later this month that will confirm whether or not this actually happened.
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