Project Merlin fails, small business bank account lending down

Business loan experts have been declaring that the Government’s Project Merlin scheme is a bust, as the amount of lending supplied to small business bank account holders has actually declined for nine months out of the past twelve.

The business lending scheme, which saw the Government entering into an agreement with high street banking institutions to improve the availability of working capital to UK business owners, saw its figures collapse by 35 per cent from September to November of 2011, as credit demand from businesses with sales under £1 million declined, figures say.  During the same period of time, new lending to slightly larger businesses fell again, with firms with less than £25 million in sales receiving 6.1 per cent less lending from banks.

Even larger firms reportedly said that it was difficult to secure credit, even though overall business lending did increase by a slight margin over the past 12 months.  The Bank of England, which conducted the research study, stated that wider macroeconomic concerns were at play with the contraction in lending as business confidence levels decline, adding that it was less investment and more requirements for working capital that led to demand for business lending.

Labour’s shadow small business minister, Toby Perkins, was critical of the Government, stating that it had grown ‘out of touch’ with British business needs and had neglected to do enough to get high street to lend once more.  Mr Perkins added that companies are being held back from growth because banks may be less interested in small business lending than they are in paying ‘bumper bonuses’ to executives.

© 2022 All rights reserved. Reproduction in whole or in part without permission is prohibited. See our copyright notice.

Tags: , ,