SME credit dominates pre-Budget agenda


SME credit dominates pre-Budget agenda

Simon Quicke

file000971208789.jpgThe issue of SME credit is already starting to dominate the political agenda even before the Budget sets out the details of plans to help ease the flow of funds to smaller businesses.

Business Secretary Vince Cable has revealed that he believes not enough is being done to help smaller firms and in a leaked letter suggested that the government owned Royal Bank of Scotland come under more pressure to lend to British businesses.

His ideas for change, which have been greeted with disdain by the banking community, follow on from the failure of the existing plans to get enough credit to SMEs through high street banks, under the Project Merlin plan.

The banks revealed last month that the targets they had signed up for around SME lending had not been hit.

The banks were meant to hand out loans totaling £76bn last year but figures from the British Banking Association revealed that only £74.9bn had been lent.

That failure adds to the government's next proposal, the credit easing scheme, which was announced in the Autumn Statement and will be fleshed out in more detail at the Budget in a few weeks time on the 21 March.

The Chancellor George Osborne confirmed the establishment of a £40bn credit easing scheme to underwrite bank loans to small firms as one of the main actions announced in the Autumn Statement.

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