Banks have vowed to make it easier for small businesses to gain access to credit after pressure from the Government led to talks between the two sides.

The news follows a recent uproar by small business representatives as banks have seen an injection of funding from the European Investment Bank, however none of this funding seems to have been reaching the small business customers that are struggling in the economic downturn.

After a meeting between lenders and small businesses, held by the Business Secretary Peter Madelson, which saw the parties coming to a solution that would seem to fit both the banks and small firms in the country.

The talks will come to small businesses as great news and in particular should please the Federation of Small Businesses who have been rallying for more aid for small businesses.

Recently, the FSB uncovered statistics showing that 30 per cent of firms had witnessed a growth in costs for credit over the past two months.

John Wright, chairman of the Federation, after the news was announced, called for more action to be taken against banks that were not helping small businesses that were finding survival difficult in the economic climate.

He said, “With trade down and invoices increasingly being paid late, small businesses are having to turn to their banks for credit to tide them over. But, despite the Government’s £500 billion bailout, the banks still do not seem to be lending to small businesses.

“These figures show that, with nowhere to turn, small businesses are having to consider cutting jobs and maybe even closing down. This would be a disaster for millions of employees as well as the economy as a whole.”

HSBC has recently made a £1 billion fund available to small businesses that bank with them with the purpose of helping  “customers with fundamentally sound businesses weather short-term shocks caused by the downturn”.

However, the outlook is still grim for the small businesses in the country as a poll recently showed that two in five small businesses were being made to feel that unless the outlook were to change in the country, they would have to close their doors.  The FSB also pointed out that one in three small businesses were finding the task of getting credit still a harsh struggle.

Wright said, on the subject, “The onus will now be on the banks and their branch managers to stop their Scrooge-like tactics and open their pockets to small businesses.”

However, banks in the country have been angered by the recent calls by the Government to maintain lending as well as passing on the interest rate cuts that were recently made.  The country is witnessing the lowest interest rates that have been around in Britain since 1951, however many banks still have not passed on the cuts to those that need it – the small businesses.  However, the recent announcement by the Royal Bank of Scotland claiming that they will be guaranteeing the overdraft rates for their business customers will provide a stimulant for other banks in the country to follow suit.

Our Random Articles

• Small businesses plan staff cuts in early 2012
• Unemployment rise – what does this mean for small businesses?
• The Mary Portas Review
• Experts Warn Small Firms of the Need to be More Aware of IT Security Risks
• SMEs Unprepared for New Pension Reforms

More Links