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Government 'should be more aggressive' on business lending

Date Added: 23/01/2013  

The government has been urged to take action to improve the business lending situation in the UK after data from the Bank of England revealed that loans to firms has fallen again.

Adam Marshall, policy director at the British Chambers of Commerce (BCC), said it is a concern that not all banks and building societies have signed up to the Funding for Lending Scheme.

The project offers lenders incentives to increase the amount of money they are lending to small businesses around the country, but its impact has been minimal since its launch last year.

Speaking to BBC News, Mr Marshall said: "The government and the Bank of England should make a more aggressive effort to get lenders to take up funds and promote the scheme."

HSBC is among those to claim it has no need to take part in the Funding for Lending Scheme, due to the fact it is already approving enough loans to small to medium-sized enterprises.

"We're not seeing any significant feed-through to business lending," the BCC representative pointed out.

The British Bankers Association added it is not a surprise that figures released by the Bank of England show that mortgages have seen a larger impact than loans to companies.

"Mortgages are relatively simple products," it says, noting: "But with a business loan, banks will need to look at the supply chain and many other issues."

Mr Marshall stated that the Funding for Lending Scheme is currently a long way away from being able to provide any kind of tangible support to the UK's economy.

Some firms may need to take business debt advice in order to avoid being served with a winding up order over the course of the coming weeks and months.

Data from the Bank of England recently showed the annual rate of growth in the stock of lending to UK businesses was negative in the three months to November 2012.

Need advice on Winding up Orders? Call 0800 9020123

Posted by Michael Beam

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