FSB: Comment on Project Merlin figures

Commenting on the Project Merlin lending figures released by the Bank of England showing that the banks lent a total of £37.3 billion to small businesses in the first half of 2011, John Walker, National Chairman, Federation of Small Businesses, said:

“As was predicted last week, the banks have fallen short of their lending targets to small firms for the first six months of the Project Merlin agreement, but issues still remain over whether lending targets really address the fundamental problems that exist in the banking sector. While the figures show that lending to small businesses has increased 22 per cent since the first quarter, the fact remains that only a small number of banks still control the lion’s share of the market. This needs to change and we call on the Independent Commission on Banking to make increasing competition in the sector one of its key recommendations to Government.

“The Bank of England’s downgraded growth forecast for 2011 means that we need a clear plan for growth to allow people to set up in business and for firms to have the confidence to grow and invest to really help strengthen the recovery. And, in order to do that, businesses will need an injection of capital which most of them will only be able to get from the banks. However, a recent FSB member survey showed that a third of firms that had been refused credit believed they had missed their growth opportunities . With a number of businesses affected by the civil unrest of the last week, we need to ensure that the banks will also be there to help them get back up and running.”