Saturday, June 4, 2011

Bank lending....will it ever improve?

One of the biggest issues that is facing small businesses in the North East is that of bank lending.

The Project Merlin agreement between the banks and the Government has not produced the magic for small businesses. The lack of small business lending has also been recognised (finally) by the British Bankers Association (BBA). Despite using the usual 'There's not enough demand' line the BBA's own statistics show lending to small businesses has decreased.

The Bank of England's data also points out that lending to small businesses has never really grown over the past two years.

With all this data why isn't the Government ramping up the pressure on the banks to start lending again? The Business Secretary Vince Cable appears to have totally bought the line that the banks can't lend if there is no demand except when his party is looking for a way to differentiate it from the Conservatives.

More targeted action to help small businesses get the lending they require needs to happen now. Waiting for the second set of Project Merlin data will confine too many small businesses to shutting down.

As a start how about the banks outlining what they need from small businesses before denying applications? This would help improve the communication between banks and businesses as well as improving the trust between both.

Small businesses know that the back of a fag packet business plan days have gone but they have no idea what has replaced it. By working together the statistics could be improved and small businesses could continue to grow and prosper.

What do you think? How can we get more lending to small businesses?

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