More Pressure On Banks To Lend To SMEs

Fri, 04 Jun 2010

Business Secretary Vince Cable has increased the pressure on Britain’s banks to lend to small businesses .

In his first keynote speech as Business Secretary, Mr Cable made clear that one of his priorities was to redouble Government efforts to ensure banks meet business lending targets, especially those to small and medium-sized enterprises (SMEs).

He warned that the UK banking sector’s current reluctance to provide business loans could affect the nation’s fragile economic recovery.

"The banks claim that there is no demand," he commented. "That is not right. If the bar is set too high, of course, no-one is willing to jump."

"The current risk aversion by banks in the SME sector will stifle recovery and, if it does, will actually rebound on the banks through bad debt," he added.

Steve Hughes, from the British Chambers of Commerce, welcomed the Government’s commitment to improving business access to credit, saying there were inherent problems in the relationship between banks and businesses.

However, he added that there had been fewer problems in recent months due to a decline in demand for business finance .
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