Barclays has got big plans for your small business in 2009 as they announce that they will be increasing their lending to SMEs by £1.5 billion.

This means that the pool available by Barclays for lending to small businesses will go from £15 billion to £16.5 billion.  The news follows weeks of pressure from the Government, in particular Alistair Darling, on banks to maintain lending through the economic downturn.

Banks in Britain have also been attacked by the Federation of Small Businesses, which saw their chairman John Wright accuse the banks of being “scrooge-like” by refusing to pass along the interest cuts and cut down on lending to small businesses in financial trouble.  Banks had also raised their rates on banking which had hit small businesses hard.

The announcement comes after other large banks in the country have attempted to come to the aid of their customers.  HSBC announced special funding recently, and we have also seen Lloyds TSB and HBOS rushing to freeze interest rates and repayment conditions in a bid to keep the Government off their back.

Barclays are also claiming that they will be introducing a new service to their small business customers called CreditFocus, which will aim to provide credit-checking services free of charge.

Managing director of local business for Barlcays, Steve Cooper, has identified the necessity of the new service, saying, “Two of the leading causes of business failure are late payments and bad debt.  Our CreditFocus service will help all small businesses, whether or not they borrow or bank with Barclays, to get paid and paid in a timely manner.”

Barclays are also claiming that they will now be in a position to utilise the Government’s Small Business Finance Scheme in 2009, which will guarantee small business lending between £1,000 to £1 million.

Group Chief Executive, John Varley, highlighted Barclay’s ideals for helping their customers in a time of uncertainty.  “Especially during this time of uncertainty, Barclays is committed to lending to and supporting our business customers,” Varley said. “We have a strong history of working with business owners through economic highs and lows, and that support will continue. Today’s commitments are aimed at helping SMEs in the UK cope with the difficult environment.”

However, news has surfaced that house prices in Britain are set to drop a further 30 per cent during the economic downturn, a sign that we are not through the worst of it yet.  Varley went on to describe how ridiculous the previous policies of banks were before the downturn as 100 per cent of mortgages were approved.

The £1.5 billion figure that Barclays are announcing mirror that of HSBC who also recently vowed to inject £1.5 billion into their UK banks for British customers.  If this is the benchmark, then we will likely see other banks follow suit or at least be pressurised by both the Government and the public into following HSBC and Barclays.  Varley claims that the banks should shoulder some of the blame for the state of the economy, however, pity and blame does not keep small businesses open.

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