Banks do not want to ‘pull the plug’ on small businesses but are facing their own difficult times, Lord Mandelson said today.
The business secretary made the comments while announcing small businesses are to meet with bank bosses in a forum organised by the government to stem credit crunch fallout.
The proposed forum follows a meeting between chancellor Alastair Darling, business secretary Peter Mandelson and chief executives of the high street banks, the BBC has reported.
Mandelson said the forum would address issues faced by both the banks and small businesses.
“Where there are issues about the availability of lending and the terms of lending, they can thrash these out and tease out the problems,” he said.
“There’s willingness to make sure that we get through these very difficult times. Banks do not want to pull the plug on small businesses unnecessarily – they want to help where they can, but banks are facing difficult conditions of their own.”
However, David Frost, director general of the British Chambers of Commerce said the cost of borrowing had increased and there was no evidence to suggest it easing.
He told the BBC: “Banks are charging for services that were previously parts of the deal. The idea of relationship banking is breaking down. Everything is going through regional offices and it is taking much longer to get the OK on a loan or overdraft.”
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