Recent figures indicate that the banks are falling behind their lending targets to Small and Medium Enterprise. UK banks have fallen behind the pledge made to increase lending to SMEs, part of the Project Merlin agreement between the main UK banks and the government.
Bank of England figures released this week, show that the five main UK banks could fail to meet their target of £76 billion to SMEs by £1 billion. During the initial three quarters of the year, £56.1 billion was made available to SMEs. During the last quarter of 2011, banks would have to make £19.9 billion available to SMEs in order to meet the targets set out under Project Merlin. The agreement to supply UK companies overall with £190 billion of lending is on target to be met by the banks, but the SME lending remains a sensitive issue. The chairman of the Federation of Small Businesses, John Walker said:
“While the banks are on course to meet lending targets to all businesses, they have yet again missed the small business target. We need to see a clear change: more competition and new lines of credit opening for small firms if they are to help boost the recovery. The chancellor can address this by making credit easing open for firms that want small amounts of finance.”
George Osborne has said he will provide details of credit easing in his Autumn Statement. Sir Mervyn King, the Bank of England Governor has called for increased tax breaks in addition to the government giving orders to Lloyds and Royal Bank of Scotland, which are owned by the state, to increase lending.
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