By Max Clarke

The Bank of England’s Trends in Lending report, revealed that access to credit for SMEs remained broadly the same compared with the last quarter, despite Project Merlin and Business Growth Fund initiatives being launched in the first half of the year.

Much of this lending dearth has attributed to an overall rise in the cost of banking as a result of changes and reforms implemented by government. Such costs from banks’ banking arms have been passed on to the customer, resulting in excessively high rates for loans in small businesses.

As banks enter half-year reporting season, their actual commitment to the Project Merlin lending initiative will be revealed and the initial fears of small business owners could be vindicated. Brendan Flattery, CEO of Sage UK and Ireland, comments on the concerns of small businesses and the need to support those under pressure to stimulate growth in the wider economy

“As initiatives like the Business Growth Fund and Project Merlin start to take shape, the effect they will have on the credit and lending landscape is still shrouded in uncertainty. With access to credit for SMEs and businesses in general remaining broadly unchanged according the Bank of England’s latest Trends in Lending report, many small businesses are losing confidence in banks and lending institutions and are more concerned with repaying existing loans, rather than taking on more credit and pushing for the type of growth needed to stimulate the wider economy.

“With consumer confidence at a 13 month low it’s small businesses that are being hit the hardest and without access to much needed credit, opportunities for growth are significantly reduced. From the very beginning, our monthly Omnibus survey of small business owners showed distinct scepticism in Project Merlin with almost half expecting it to have little or no impact on bank lending, and we are yet to see any real evidence that might alleviate these concerns. As the banking industry’s half year reporting season gets underway next week, we will have the first real opportunity to see whether banks are actually living up to their lending commitments.”

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