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Banks miss Project Merlin SME lending targets

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14th Feb 2012
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The Bank of England has confirmed that the UK's five main banks missed their Project Merlin targets for lending to small businesses in 2011.

As previously highlighted on AccountingWEB, the official assessment of Project Merlin confirms that total net lending from the biggest banks fell in every quarter of the last year. The BoE figures show that the five banks met their gross targets - however, falling £1.1bn short of the £76bn target.

The figures broken down by bank are: 

  • Barclays - £14.7bn against a target of £14bn
  • HSBC - £11.7bn against a target of £11.7bn
  • Santander - £4.3bn against a target £4bn
  • Lloyds TSB - £12.5bn against a target of £11.7bn
  • RBS-  £31.7bn - nearly £3bn below its target

Peter Ewen, managing director of Venture Finance, said: “Despite Project Merlin’s promises to boost lending to SMEs, the banks fell short of expectations, particularly with regards to small businesses. As a result, many SMEs have not benefitted from the scheme and are still struggling and in need of cash.

Ewen continued: “However, the banks are not entirely to blame as we are still clearly facing the problem of a depressed demand for any type of finance. Our own statistics show that almost a third of SMEs have no plans to invest in growth this year.”

Overall lending to business was £214.9bn - substantially exceeding the £190bn target - however, without confidence in financial institutions, small businesses will continue to go without reliable forms of finance.

Chris Checkley, partner at Russell New, said: “The sudden loss of access to affordable working capital to aid cashflow put in stark relief the risk of placing undue reliance on what tends to be termed mainstream banking finance.

"We must address the most pressing business challenges such as how to secure a dependable, consistent supply of business finance and working capital in order to ensure SMEs are at the forefront of economic recovery and job creation.” Checkley said.

Replies (1)

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Teignmouth
By Paul Scholes
17th Feb 2012 10:59

So what can we do?

If the banks don't need our money why not put it somewhere where it will do some good, eg here or here or even here?

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