FSB still pushing for small business loans

Small businesses are still getting short shrift from lenders, and that is contributing to the overall economic problems in the UK, according to the Federation of Small Businesses.  John Walker, FSB’s National Chairman, says that the figures reported by the BBA (British Bankers Association) do not reflect the actuality of what’s happening to small start-up businesses.

The Association reports that it is ‘on target’ to meet the lending criteria set out by the Treasury’s 2011 initiative called Project Merlin.  That target is £76 billion for small and medium businesses this year, and in the first half of 2011 the banks loaned £37.4.  According to a spokesman for Merlin’s member banks that include Barclays, Lloyds Banking Group, Santander, HSBC and RBS, by that measure the banks are fulfilling their commitment to small business.

However, an independent survey by a BBA task force made up of banks and business organisations demonstrates that smaller businesses with up to nine employees were more than twice as likely to be refused when they applied for a loan, and more than half of the businesses in that category didn’t even apply because they expected to be refused.

Walker said that this means smaller businesses that make up over half of the UK’s GDP are losing out on opportunities to expand or to get started in the first place.  FSB is urging the Independent Banking Commission to make strong recommendations to Government for more competition amongst the major banks to respond to the need for financing of businesses that have not yet established a strong credit history.  Walker believes that those businesses will be a key factor in economic recovery for the UK.