Banks May Be Hindering Small Businesses From Obtaining Loans

Please see the comments below, relating to two recent newspaper articles – ‘Banks may be ‘hindering’ small businesses, says OFT’ and ‘Lloyds to grow SME lending by 1 billion pounds in 2014’.  Key points are as follows:

  • Lloyds has pledged to lend an additional £1 billion to UK SMEs this year.
  • Lloyds says it now sees the recovery gathering pace and that there are more reasons for SMEs to be optimistic about growth.
  • This pledge comes as a result of last week’s update from the Office of Fair Trading’s(OFT) current inquiry into business banking .
  • The update said that banks may be hindering SMEs from obtaining loans from alternative providers.
  • The OFT warned that further action could follow unless banks change their behaviour.
  • As an example, companies often face long delays when requesting banks share information with non bank sources of lending.
  • To date, banks have been widely criticised for not providing enough credit to small companies.
  • Lloyds has made this pledge promptly following the update from the OFT released last week.  It remains to be seen whether this pledge will convert into money lent, if any other of the big banks will follow suit and if bank lending to SMEs will ever return to pre 2008 levels.
  • Until then, alternative lenders such as The Route – Finance will continue to attract good quality loans from SMEs who are unable to obtain the finance they need from banks.

The link to the OFT article is her: http://goo.gl/Vee9ic.

The link to the Lloyds article is here: http://goo.gl/Im7lHu.