It was announced recently by the Business Secretary, Vince Cable, that the big banks in the UK were failing to meet their agreed targets with regards to lending to small and medium sized businesses. Figures were released recently showing that based on quarterly results the banks had not met their targets, and were therefore not on target for meeting their annual business lending minimum figure.
The banks have argued consistently that the reason behind the low lending figures for small and medium sized businesses was that in the current climate many businesses did not want to take out loans. Banks claim that whilst they are making credit available for business customers the low demand for finance means that there is little they can do to increase their lending figures until demand increases.
This has now been backed up by an industry official, Anthony Thomson, chairman and co-founder of Metro Bank. He said that his bank is now targeting small businesses as its main customer but that demand for borrowing is low. He said that whilst many businesses had signed up to the bank the demand for finance was much lower than had been expected, which meant that the bank was unable to lend as much to business customers as it may have anticipated. He also said that businesses were failing to look for the best rates on loans.
He said: ‘I hate to sound like I am defending the big banks but our experience is that there is just not the demand for credit from small companies.’ He also said: ‘I always thought small firms would be very sensitive to interest rates, but they are even less concerned about the rates than consumers.’
- Lending figures expected to see mixed reactions
- Difficulties in Borrowing Continues for Small & Medium Businesses
- Small Lending Institutions bullish about SBA Guaranteed Loans
- The Reason for Decline in Small Business Lending Eludes Experts
- Treasury’s Small Business Lending Fund Paves Way to Reach Local Banks