Partner Article

FSB backs government’s call to bank bosses

THE region’s business community yesterday backed the Chancellor’s call for UK banks to increase their lending to SMEs.

In an interview with a national newspaper, George Osborne said the government “will not tolerate the banks pilling the pressure” on small firms struggling for credit and is looking at ways to get banks to increase their lending to firms.

In reaction to his comments Simon Hanson, North East policy manager at the Federation of Small Businesses, said many of their members rely on the banks for external finance and accessing funds is still one of the biggest concerns for small businesses in the region.

“These challenges will become more pressing with many banks refinancing over the next year making it even harder for many small businesses to get credit,” said Mr Hanson.

“We support the government’s moves to increase greater competition within the banking sector, including the creation of a Post Bank, which will help assuage some of these problems but more needs to be done to broaden the sources of credit available to small businesses.”

Last month Business Secretary Vince Cable unveiled a consultation paper containing options to improve cash flow to businesses.

Mr. Cable said the Financing A Private Sector Recovery paper could propose targeting bank dividends and bonuses as part of a “carrot and stick” method to stimulate lending.

This comes as welcome news to Seth Ridley, partner of Newcastle based web design company, Kino Creative, who said the government needs to maintain the pressure on banks if the region’s SMEs are to flourish.

He added: “Financial institutions should be prepared to lend the relatively small amounts needed to support entrepreneurs and SMEs.

“Excessive borrowing as a way to grow business should be reconsidered, but for the time being SMEs need a lifeline.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .