Bank chiefs are meeting with the chancellor this afternoon after he called them in to discuss the issue of small business lending.
After admitting he was ‘extremely concerned’ by the cost and rates of small business lending, Alistair Darling called in the chief executives of HSBC, Barclays, Lloyds Banking Group and Royal Bank of Scotland to discuss the matter.
Speaking on the BBC’s Andrew Marr show yesterday, Darling said he was troubled by the fact that lending charges appeared to have risen despite the fall in interest rates.
In a recent survey of credit conditions conducted by the Bank of England’s regional agents, more than 80% of businesses reported that external finance had become more expensive or harder to obtain over the past year.
The Forum of Private Business has welcomed Darling’s meeting with bank chiefs and said it was glad attention was being brought to the issue.
However, the business lobby group expressed concerns over evidence suggesting loan applications are being decided by ‘centrally-prescribed criteria’ instead of on a case-by-case basis.
Chris Gorman, FPB spokesperson said: “Many of our members feel that their businesses are perfectly viable but are being denied loans or overdrafts because a computer somewhere says ‘no’. We believe that some banks are automatically denying credit to pubs, bars and restaurants, for example.
“We want to see a return of the old-fashioned relationships between small businesses and their local bank managers in order to improve the flow of finance to firms that deserve it at this crucial time.”
However, the British Bankers’ Association (BBA) has insisted that overall lending to businesses increased in June.
Figures released today by the BBA suggest that overall lending to small firms rose by £391m in June, deposits increased by £577m and nearly 50,000 new banking relationships were established.
“These figures provide more evidence of the high street banks’ support for small businesses,” said David Dooks, BBA statistics director.
© Crimson Business Ltd. 2009
