Small business lending drops


Small business lending drops

Simon Quicke

The level of credit that banks are providing to SMEs has declined despite the best efforts of the government to force them to increase the flow of cash to smaller firms.

Under the terms of Project Merlin, which the banks agreed back in February, more money was meant to be handed out to business and although the broad lending figures are up in the crucial SME category the number is down.

Between July and September there were £57.4bn of new loans from the main high street banks, which was an increase on the £53bn handed out in the second quarter.

But the amount of credit making its way to SMEs fell in Q3 to £18.8bn from £20.5bn the previous quarter.

Small business groups have been urging more credit for the last few years and the reaction this morning was to criticise the failure to support the engine of the UK economy, which had missed out on growth opportunities as a result.

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