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I wrote to Vince Cable asking why the Banks did not appear to be supporting small businesses after the Bank bail-out – Supporting loans to SME were one of the pre-conditions of the rescue loans. Please find attached the response which answers some of the issues, I was wondering if you wanted to post this on the site for general info (I have removed all references to me but left the text of the body letter untouched).
Dear Mr XXX,
Thank you for your e-mail of 20 September to Vince Cable MP about bank lending to SMEs in the current economic climate.
The Secretary of State receives a large amount of correspondence every day and is unable to respond to each one personally. I have been asked to reply.
We appreciate you bringing these issues to our attention, and I would like to give my assurances that the concerns of SME businesses are taken very seriously.
The coalition agreement makes clear that ensuring the flow of credit to viable SMEs is essential for supporting growth and should be a core priority for a new government, and we will work together to develop effective proposals to do so.
In that respect, we continue to call on the banks to lend to credit worthy businesses. There are various measures in place to support access to finance for SMEs, including equity schemes providing venture capital finance and the Enterprise Finance Guarantee (EFG), which enables banks and others to lend to viable small businesses who lack sufficient collateral or financial track record to secure a normal commercial loan. To ensure that more businesses have access to credit as the economy recovers, the June Budget announced that the EFG facility for this year is being increased by £200 million to £700 million for small businesses until 31 March 2011, supporting around 7000 SMEs.
As Mark Prisk MP, Minister of State for Business and Enterprise is on record of saying, we will continue to challenge the banks. He wants to ensure that if they are not doing their job, we hold them to account.
In the meantime, the Government also continues to ensure delivery against agreed lending commitments to SME businesses by Royal Bank of Scotland and Lloyds Banking Group.
The Government also recently published a Green Paper on business finance (Financing a Private Sector Recovery) which can be found at www.bis.gov.uk/businessfinance. Although the closing date for responses has now passed, through this Green Paper the Government wants to take into account the views from business, individuals and financial institutions on what they regard as the key challenges in facilitating business access to finance and what approach they think would best address these. In line with the Code of Practice for written consultations, the Government has committed to publishing a summary of responses, giving feedback and how the consultation process influenced government policy.
As referred to in the Business Finance Green Paper, the major UK banks and the British Bankers’ Association (BBA) taskforce have explored, among other issues, the problems currently affecting securitisations markets, and discussed what could be done from a UK banking perspective to create a stronger and more sustainable market.
We will be expecting positive outcomes with a view to identifying possible solutions to the current problems being faced both by the banking sector and by businesses.
BIS MINISTERIAL CORRESPONDENCE UNIT
The views expressed are not necessarily the editors and www.buyingapub.com accepts no responsibility for them, we do try to avoid offensive or litigious statements being made. They are written by concerned professionals in the industry who feel that these issues should be raised to ensure that all licensees are made fully aware of many hidden pitfalls.