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Project Merlin must now refocus, say FPB

The Forum of Private Business is calling on the banks to refocus on financing small business, after the ‘Big Four’ missed their lending targets under Project Merlin.

While Barclays, Lloyds HSBC and RBS achieved their overall lending figures, they missed their £76 billion SME lending target by £1.1 billion.

Despite repeated promises to engage more readily with the SME community, many Forum members still experience problems with accessing finance from the banks and often find themselves seeking alternate forms to aid cash flow including credit cards and loans from friends and family.

Despite the evident difficulties, the news this morning indicates that the banks now need to offer more assistance to small firms by offering better value products, simplifying lending criteria and putting more focus on building strong relationships with SMEs.

Nonetheless, the Forum’s chief executive Phil Orford accepts that the situation is not as clear cut as it appears, as while the banks missed their lending targets for small firms, it was not by such a huge amount as anecdotal evidence suggested.

He commented: “What perhaps muddies the water and makes the bank’s failure here less clear cut though is that overall demand for bank finance is down.

“Many companies have been simply looking to survive or consolidate over the past year rather than seeking credit to expand.”

He now believes that the banks now need to concentrate in rebuilding SME confidence by offering cheaper credit, more investment in regional branches and the restoration of lending powers to local bank managers.

Phil continued: “The onus now, however, is really with the banks to get the ball rolling. They need to reach out further to business and repair the damaged relationship with firms who are essentially their core customers.

“And if the banks are unwilling or unable to deliver these core requirements, government should intervene more stringently to ensure that the do.”

Small businesses also have their part to play, and must ensure that banks can find no reason to refuse them credit.

He added: “If businesses can demonstrate that have regular and standardised financial information regarding their accounting, which is supported with a clear business plan, then this will also boost their chances of success, as will demonstrating their ability to repay their loans.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .