Small business bank accounts not getting enough business loans

According to new data recently unveiled by the Bank of England, small business bank accounts are still not getting the business loans they need, even though High Street banks have agreed to do so under the Government’s ‘Project Merlin’ scheme.

Banks agreed to provide £190 billion in working capital to businesses this year under the accord, and £76 billion of that sum was earmarked specifically for small and medium sized business enterprises.  However, nine months into Project Merlin, High Street banks have only lent small businesses a total of £56 billion, meaning that some £20 billion remains to go before the end of the year.

Banks and business societies have seemed to focus on lending to larger businesses instead, as their £143 billion target has been exceed by a good £15 billion over the first three quarters of 2011.  The Treasury was gladdened by the large business lending figures, but issued a warning to financial services providers that more must be done for smaller businesses.

One spokesman for the Treasury stated that the Government was encouraged to see that banks in the UK have exceeded their large business lending target by approximately 11 per cent.  SME lending is also up by around the same amount in comparison to last year’s figures, yet the Treasury said that more must be done to make sure lenders meet their commitments under Project Merlin before the New Year.

The Government has serious concerns over the lack of credit being made readily available to small businesses.  SMEs have claimed that the difficulty of getting loans at competitive interest rates and reasonable terms has been unconscionably high, industry experts say.

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