Small Businesses And Banks Tease Out Lending Problems Via New Forum

Fri, 31 Oct 2008

The government has revealed plans to set up a special forum that will give small businesses the opportunity to voice their criticisms of British banks’ lending policies.

Banking institutions have started to increase their charges on loans and overdrafts, despite recently agreeing to ease lending conditions as part of the £37 billion UK bank bailout .

Some reports have also suggested that a number of banks are changing the terms of small business loan deals, giving little or no warning in the process.

The new forum announcement comes after Chancellor Alistair Darling yesterday revealed that UK banks will have to access up to £4 billion of emergency European loans in order to lend to small businesses and help them deal with the economic downturn.

Business secretary Lord Mandelson said the new forum, which could hold its opening meeting within three weeks, would give companies and banks the opportunity to ‘tease out the problems’.

"There’s a willingness to make sure that we get through these very difficult times," he said.

"Banks do not want to pull the plug on small business unnecessarily – they want to help where they can, but banks are facing difficult conditions of their own."

Angela Knight, member of the British Bankers Association, stressed that banks do not have a responsibility to support businesses that have lost their customers.
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