The Federation of Small Businesses (FSB) has given a cautious welcome to the news that Project Merlin has come to an agreement but still believes that more needs to be done to change the structure of banking in the UK to promote growth, especially for small firms.
Banks have agreed to lend £190 billion, with £76 billion specifically for small firms. However, the FSB says it will need to wait to see how the performance matrix will be implemented and how far off the target banks would have to be before repercussions will be taken, as well as ensuring how they will make certain that the smallest firms and new start-ups will receive vital cash.
The FSB has also expressed concern that the additional £1.5 billion will only go to businesses looking to receive between £2 million and £10 million in equity finance and so will not hit the smallest of businesses that need it most.
Recent FSB survey figures have showed that around 84% of small businesses are not approaching the bank for credit, either because they have already been refused or because the cost is too high. And firms which do use the banks as their main source of finance are being penalised by high interest rates – at a time when the base rate is at an all time low
John Walker, the FSB’s national chairman, said: “Today’s announcement should not be allowed to let the government or the banks off the hook