Banks pledge to help business start-ups

Date: 3rd December 2008

Two major British lending institutions have vowed to help small business start-ups through the economic crisis.

In the run-up to the merger between Lloyds TSB and HBOS, the partners have stated that they will pass on interest rate cut and increase lending to small firms.

Lloyds has specifically said it will pass on Bank of England rate reductions in full throughout 2008 and 2009, while HBOS has stated it will use £250 million of European funding to boost business start-up lending facilities.

Sandy Chen, an analyst at Panmure, told Reuters: "The banks are caught between the internal pressures to reduce lending given the deteriorating economy and tightening credit models and the government's stated need to keep lending at previous levels."

He added that if the banks meet government demands by increasing loans, it could lead to a rise in toxic debt in a few months time.

In other business start-ups news, small firms have until January 31st to file a self-assessment tax return with HM Revenue and Customs, which must now be completed online.