In the face of recent government criticism, banks in the UK fully intend to continue to play their part in economic growth in by offering business loan services, the BBA claims.
The British Bankers’ Association – in conjunction with the best business bank accounts in the UK – have announced the establishment of a Taskforce designed to keep close tabs on High Street’s ability to help make appropriate financing available to UK businesses of varying sizes, such as better access to working capital. Designed to operate for the coming 3 years, the goal of the Taskforce is to put into motion several streams of work; an initial report on its progress has been slated for the middle of this coming October, purposely timed to coincide with the statement given this autumn by the Chancellor.
The banks of High Street do currently provide the lion’s share of business loans to businesses in the UK; currently there is £720bn in approved loans to all businesses across the UK, despite stringent requirements for keeping capital in reserve in the event of an economic crisis and needing to step into the void left by specialist and overseas lenders pulled out of the UK en masse.
The BBA stated that its member banks are indeed both willing and able to offer business loans when the organisations that are requesting the funding have a solid business plan and have demonstrated the ability to repay the loan. Pointing to the £6.8 billion lent out in June to business enterprises, the BBA feels that small business bank account lending and has stabilised and that banks have increased the volume of their business loans to larger firms as well.
The BBA’s chief executive, Angela Knight commented that banks, while already providing a large bulk of financial support in the UK, are limited by several key factors. Ms. Knight placed blame on the government’s restrictive new regulations that delineate a minimum amount of capital and cash banks must hold in reserve before being permitted to open new business loans.
High Street is more than happy to lend to businesses that have a robust business plan, Knight continued, citing the latest government green paper’s acknowledgment that conditions are improving and that a majority of business organisations are able to raise the needed funds.
Knight then cautioned that there is no such thing as a risk-free business loan; those seeking business loans need to demonstrate they can generate enough revenue to repay the loans in a timely manner.
Knight concluded her statement by affirming that the best way to aid business growth is to foster movement in wholesale markets in addition to restarting the securitisation market in order to create a steadily flowing stream of new funds that could be converted into business loans by banks.