So UK banks have fallen behind on ‘project Merlin’ and have not extended the agreed volumes of credit to SMEs. So what… from both points of view.
The time when SMEs need credit is when the banks lending criteria are squeezed to the point of virtual drought. It’s only now the economy is starting to move that banks will once again lend, and even now, not enough. Credit availability is the biggest fueller of economic recovery, but banks will only relax lending criteria once each stage of recovery is seen (retrospectively) to be under way.
Which is chicken, which egg? Why is government not offering SME credit, where banks will not lend? And to a much larger extent than the equity lending being offered through the newly announced Business Growth Fund.
Or is government equally afraid of losses and defaults as the banking system?
Tags: bank lending, banking system, Business Growth Fund, credit, Paul Lindsell, SMEs