According to recent data, Project merlin didn’t meet its lending target to businesses, with a shortfall of almost £10 billion. Project Merlin is an agreement between the government and the five main banks, to lend £76 billion to small businesses, but only lent £74.9 billion. According to a survey carried out by Bibby Financial services, small business owners turn to their personal savings to maintain their business.
In another survey which was conducted by the Federation of Small Businesses, a third of business owners use their own private funds to maintain their business. The net lending figure, which is the total amount loaned by banks less the amount repaid, had fallen by £9.6 billion, according to data released by the Bank of England for the period January to December 2011.Vince Cable, business secretary acknowledged that business finance was still a problem for small businesses.
Four of the main banks met and even exceeded their targets, which has resulted in RBS being blamed for the shortfall. The Forum of Private Business’ Phil McCabe said:
“Despite the Project Merlin targets, banks have consistently failed substantially to increase lending to the small firms that need it most. Lending costs remain punishingly high. We are urging banks to consider a range of lending risk criteria, such as firms which can show they have lots of big orders in the pipeline.”
However, the financial secretary to the Treasury, Mark Hoban pointed out that overall lending from banks had increased, which is positive news for small businesses. Financial planning is critical between business owners and their small business accountant.
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