By Jason Theodorou

Prime Minister David Cameron has called on British banks to lend to small businesses, saying that lending to UK firms 'has got to happen'. The Prime Minister said that banks swinging back into profit need to ensure that they are providing adequate funds to businesses.

Mr. Cameron's comments come after reports of a meeting between the Prime Minister and Bank of England Governor Mervyn King, which was believed to be centered around commercial bank lending. Mr. King has also previously expressed his fears over the difficulties faced by business in securing credit, and the impact this may have on the UK economy.

The Prime Minister said: 'I'm going to be meeting the Governor of the Bank of England... to make sure we find ways of encouraging the banks to help small businesses particularly, many of whom have got good ideas and are prepared to meet the terms of lending but can't get the money out'.

The Bank is expected to leave interest rates at the record low of 0.5% when it announces its decision on Thursday, potentially to mitigate the effects of severe government spending cuts as they come into play. Chancellor George Osborne has denied that there is any official arrangement to keep interest rates down.

Tracy Ewen, managing director of commercial finance firm IGF, said: 'Small companies need to think creatively about the potential sources of finances available'.

'Most owner-managers of small companies are use to relying on overdrafts, bank loans or equity funding to finance their growth — but the banks still aren’t lending to many of them! Alternative options like invoice finance - borrowing money against your sales ledger - means cashflow improves with every new customer signed'.


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