Vince Cable, Business Secretary told a parliamentary committee it is a serious problem that lending to small and medium businesses has not achieved the targets set by the government, by UK banking groups.
Recently published data by the Bank of England showed banks had met their overall lending targets but failed to meet their SME goals. SME’s often have no other source of funding than banks Cable told the committee and it was a problem with subdued lending possibly inhibiting the recovery of the economy.
It is a serious problem Cable remarked that the SME targets were not being realized. He said they were trying to get the banks to increase their desire to lend to SMEs. They had set a 15% rate of growth and certainly that was not met in the first quarter.
He received questions as to why lending remained weak and some banks argue there is a weakness in loan demand of which that is definitely a factor. He acknowledged that there was a more serious problem that banks will knowledge.