Partner Article

Will Funding for Lending help?

Small and micro businesses have told us consistently that bank lending and accessing finance is one of the biggest barriers they face.

Our latest figures show that nearly 40% of our members are being denied credit which will help them grow their business and expand into new markets.

The Bank of England and HM Treasury announced the latest scheme to stimulate bank lending to businesses last week called Funding for Lending. In a nutshell this will reduce the costs for the banks to access finance which will then be passed on to small businesses.

We welcome any initiative to help stimulate lending to small businesses across the North East but have some reservations about Funding for Lending.

If the problem is, as the banks often claim, that there is little demand for lending providing cheaper loans will not help to overcome this. Why would a small business who doesn’t want to lend be persuaded by a smaller percentage on their loans?

There have been other schemes that the Government have pushed to help boost lending including Project Merlin and the National Loan Guarantee Scheme. Anyone remember the targets being hit for small businesses under Project Merlin?

It is clear that small businesses in the North East want finance to grow their business and to some extent that the banks want to lend.

To help improve this it is vital that we have tangible evidence to show that money is being passed on to small firms and not just to shore up the banks.

What’s your thoughts?

This was posted in Bdaily's Members' News section by Simon Hanson .