The FSB claims that small businesses cannot start-up and grow with the present lending targets set by the government.
Although UK banks appear to be on course to meet their Project Merlin lending targets, this is not enough to genuinely help smaller businesses, the Federation says. Recent data shows that £37.4 billion has so far been lent to smaller businesses, £0.6 billion short of the Project Merlin target of £38 billion.
The banks must provide a total of £190 billion this year, of which £76 billion must go to smaller firms. So far gross new lending to UK firms has reached £100.4 billion.
John Walker, the FSB’s national chairman, said the targets are not addressing the underlying problem which is that a handful of banks have control over most of the market. With global financial fears, there should be a genuine attempt to help new businesses start-up and grow, rather than concentrating on meeting targets.
A recent survey by the FSB found that 20% of small businesses have tried to obtain finance over the past year and one-third of them had their application turned down.
Pernille Bruun-Jensen, the MD of Intuit UK, said that it was encouraging to see that UK banks are sticking to their Project Merlin targets but they must prioritise lending to small businesses for the remainder of this year. Furthermore, it will be interesting to see if specific measures to support small firms will be implemented after the Independent Commission on Banking gives its recommendations in September.
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Image: targets by hans s
