FSB: Lending targets are not the answer

Date: 14th February 2012

Lending targets are not the way to go to boost the UK's small enterprises.

That is the view of the Federation of Small Businesses (FSB) after new figures showed that Project Merlin targets for lending to small firms were missed by some £1.1 billion.

The organisation also revealed that its own research has shown that small businesses no longer have the confidence to approach banks for financial support.

According to its latest research, the number of businesses with an overdraft has fallen to 35 per cent, while just eight per cent have a secure loan and seven per cent have an unsecure loan.

This marks a decline of eight per cent, three per cent and four per cent respectively, the FSB explained.

John Walker, national chairman of the FSB, commented: "We have long said that targets are the wrong instrument to encourage lending and growth.

"Even though overall lending is above target, this shows that money is going to bigger businesses and not new and fledgling firms that need it to take advantage of growth opportunities that are there even in these challenging times."

Posted by Thomas Fletcher