SME Funding Under Project Merlin Falls Short

Network Sites

Your are here: Home

News

SME Funding Under Project Merlin Falls Short

Wednesday, November 23, 2011

Figures recently released have revealed that the banks participating in the Project Merlin small business lending programme are falling short in terms of fulfilling their obligations to SMEs in the UK.

Under the terms of Project Merlin, Barclays, Royal Bank of Scotland, Lloyds Banking Group, HSBC and Santander UK committed to increasing their lending to businesses in 2011 to GBP190bn (up from GBP179bn in 2010), with GBP76bn earmarked for smaller businesses, a 15% increase on the previous year. In addition, the banks agreed to contribute an extra GBP1bn of equity capital over the coming three years to the Business Growth Fund, and GBP200mn to the Big Society Bank, designed to finance community projects.

However, the Bank of England has published data suggesting that, while the banks are expected to meet the overall target, total lending so far this year to SMEs is aound GBP1bn down on the projected figure for the end of the third quarter (at GBP56.1bn, as opposed to GBP57bn).

It has been suggested that a lack of demand from small businesses may be behind the lower figures, with businesses disinclined to extend themselves further financially in the current uncertain economic climate.

However, representatives of the small business sector have denied that this is the case, and Chancellor George Osborne's pledge recently to "unblock the banks" appears to give the lie to such an assertion.

Mr Osborne was speaking at the Conservative Party conference, signalling the launch of a new "credit easing" scheme designed to ease the finances of strugging small businesses, a move which was viewed by some as an indication of a lack of confidence in Project Merlin.