Banks must support SMEs

by Gill Montia

Story link: Banks must support SMEs

Recently appointed Business Secretary, Lord Mandelson, is discussing the plight of small businesses with the UK’s High Street banks.

Ministers want lending to small firms to return to last year’s levels but many businesses say they are finding it difficult to refinance their debt.

Those that do so complain that they are faced with high interest rates and restrictive lending criteria.

However, the Government has pledged that the banks relying on taxpayer support to survive the credit crisis will be banned from providing loans with conditions that are damaging to SMEs (small and medium enterprises).

Lenders such as HSBC, Abbey, and Barclays, which are not expected to take advantage of the Government’s £500 billion rescue package, will be strongly urged to follow this lead and show support for SMEs.

The situation will be overseen by a new Government forum, chaired by Lord Mandelson and to include representatives from banks and business groups.

Lord Mandelson is also setting new standards to support cash flow, having pledged that Government departments, the NHS and local councils will pay suppliers within 10 days of invoicing.