BoE: Project Merlin business loan targets for 2011 on track

According to recent figures released by the Bank of England, Project Merlin business loan targets are on track for the year after in excess of £20 billion filled small business bank accounts this past quarter.

This new figure is in line with the government-backed initiative to supply £76 billion in working capital this year to UK businesses in an effort to boost economic growth and recovery efforts.  It is a welcome respite for proponents of Project Merlin who have faced criticism in the past that lenders were not doing enough to extend finance to SMEs.

Critics point to first quarter results that revealed lending targets for Project Merlin were not met.  Industry experts claim that these findings were misleading, however, due to the target not being finalised until a month into the first quarter of 2011.

A lending surplus of approximately £2 billion exists, according to the Bank of England.  HW Fisher & Company’s insolvency partner, David Birne, remarked that financial services providers will be quite keen to tout their accomplishments for by what all accounts seems to be an encouraging first-half result.

While bankers have learnt from bitter experience to be quite so ebullient in public, Mr Birne predicted a circumspect yet palpable celebration of the newest results.  The insolvency partner was quick to add that, just because targets are met in one quarter does not mean that there is enough lending activity taking place for those firms that are in dire need of the funds.

None expect lenders to gamble on unbankable businesses, Mr Birne said.  However, in several cases banks have turned their back on firms that are more than viable, he also said.

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