Banks miss targets for small business lending

From Morris & Co’s newsletter

The experience of my clients is that banks are doing anything they can to avoid lending to (some not all) dental practices. Methods include buck passing, demanding the same paperwork time and again, individuals “responsible” being on prolonged holidays and courses without delegating or sharing responsibility. Those of us who have lived through this before recognise the tactics (and the excuses).

Banks miss targets for small business lending

The UK’s five main banks have missed their Government targets for lending to small businesses, a new report has revealed.

The banks met their overall lending targets, allowing new loans of £214.9 billion, but only £74.9 billion was lent to small and medium-sized businesses, compared to the target of £76 billion.

According to the banks, demand for credit fell among smaller firms during 2011 and remains weak.

The All Party Parliamentary Small Business Group has recently been examining the reasons why many small firms are still struggling to access finance.

The group’s Entrepreneurship Inquiry has explored a number of issues, including why women and mature people are less likely to apply for bank finance, and why a third of small businesses are still having problems accessing money from the banks.

The Confederation of British Industry (CBI) has called for measures to remove the barriers to increasing non-bank lending, and to tackle the current lack of demand.

John Cridland, CBI Director-General said, ‘This is as much a problem of demand as supply. Firms need independent help and support to locate the finance that’s right for them. So we must cut through the red tape and complexity surrounding non-bank finance to make it more easily understood by small and mid-sized businesses, which often lack the resources of a larger company’.

Meanwhile, the Federation of Small Businesses (FSB) has highlighted the fact that entrepreneurs lack the confidence to apply for bank finance, with many new business owners using more of their own money to fund their business.

John Walker, FSB National Chairman, said, ‘We have heard for so long that small businesses cannot access finance from the banks, but for some entrepreneurs even approaching the bank is not an option. While alternative forms of finance need to be promoted, this needs to change and confidence needs to be instilled in all sectors of society so that they know bank finance is a real option’.

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