Are banks overcharging SME’s for loans?

The RBS and Lloyds Banking Group are currently under investigation by the Government after allegations surfaced that the two groups may be purposely increasing loan costs to small business enterprises.

An unidentified source from the Government stated that investigators are not focused on forcing the banking institutions to make uneconomic loans, but current research shows that they may be increasing the price of credit past realistic levels.

Both banking institutions are members of the Government Asset Protection Scheme, under which they agreed that they would lend an increase of £39 billion in loans to SME’s above the previous norm.

Although both of the banks will be able to reach the target of mortgage loans by March, the banks have admitted the same target will not be achievable in terms of corporate lending.

At the same time as the investigation, SME’s have also reported an increase in anxiety when it comes to finding loans.