Accreditations
Government must 'bolster lending to small businesses'
16 February 2012
The government's attempt to improve the level of lending to small and medium-sized enterprises (SMEs) fell short of its objective and indicates the difficulty SMEs have in gaining help from banks to establish their business.
Lending to SMEs did increase 11 per cent through 2011. However, banks were over £1 billion short of the amount that they were supposed to lend to smaller firms under the guise of Project Merlin.
The project outlined aims between the government and five main banks to increase lending.
Chancellor of the exchequer, George Osborne, now hopes that the Treasury can create a national loan guarantee scheme (NLGS) so that SMEs have a greater chance of gaining funding for their business endeavours.
This is particularly important as the need to strengthen the economy, which is under threat from Moody's downgrading the UK's AAA debt rating.
"The idea of an SME bank should also be seriously considered, given the difficulties that small firms are facing in obtaining credit on reasonable terms," says David Kern, chief economist at the British Chambers of Commerce.
The need for a substantial credit-easing plan is as clear now as it has ever been.
Filed under: SMEs
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