Small businesses getting a ‘rough deal’ from banks

The Federation of Small Businesses has said the structure of the British banking market is prohibitive to start-ups and small firms, amidst claims that sourcing finance still remains difficult for such organisations.

While the banks appear to be on course to meet their full-year lending commitment stipulated by the government’s Project Merlin programme, FSB chairman John Walker said the targets fail to address the “underlying problems” in a banking sector where only a handful of names control the majority of the market.

“With global economic and financial fears, it should not be about meeting targets but about genuinely helping businesses start-up, grow and invest to help to put the UK recovery onto firmer ground,” he argued.

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Walker said that a recent FSB member survey revealed that a third of small firms which had applied for credit in the past year had been refused.

“This has meant that growth opportunities have been missed or delayed for many businesses,” he said. “The FSB is urging the Independent Commission on Banking to be bold in its recommendations to government in September and to ensure that increasing competition in the sector is at the forefront of its report — without this, small firms will continue to get a rough deal.”

Reports suggests that the five biggest lenders — Barclays, HSBC, Lloyds, RBS and Santander UK — have made £37 billion of new credit available to small businesses in the year to June, but this is still £1 billion short of the target set out under Project Merlin.





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