Darling calls on banks to "relend money"

Date: 27th July 2009

Britain's banks have been given a warning over small business loans by the chancellor of the exchequer.

Alistair Darling said that many firms, including vulnerable sole traders and business start ups, could be paying too much interest on the money they have borrowed.

Other business owners are likely to have been refused outright for credit, as bank criteria have been tightened by the financial crisis.

Financial firms in the UK have seen revenue streams severely damaged in the credit crunch, meaning that they are less willing to extend cheaper credit to perceived "high risk" clients than before.

However, this has had the knock-on effect of squeezing revenues at many smaller businesses, who are dependent on bank credit to make ends meet.

Speaking to the BBC's Andrew Marr Show yesterday, the chancellor said: "I want banks to rebuild their balance sheets, but at the same time because of the particular circumstances we are in now, we also need them to relend money."

Also talking to the BBC, Stephen Alambritis at the Federation of Small Businesses offered support for the comments.

"It is hugely important that Mr Darling keeps tabs on the banks to ensure they are lending money to firms, and at fair rates," he said.