Coalition fails business on banks, says survey
British businesses have seen no changes in bank attitudes to lending to despite the Coalition's claims that it had brought the banks into line.
In February, "Project Merlin" promised to increase lending to smaller firms by £10bn to £76bn as part of a wider deal with the banks, but a survey by Hotfrog found three-quarters of firms had seen no change in attitudes.
Researchers spoke to 500 companies and found 75 per cent had seen no change in banks' attitudes to lending. Some 70 per cent of respondents said better access to funding would allow them to expand their businesses and hire more staff.
Around 41 per cent of business owners said they'd use their savings if they needed fast access to finance.
Project Merlin was signed up to by the main four High Street banks and Santander. It supposedly means that chief executives bonuses will be, in part at least, decided by how much they lend to smaller firms.
The deal also covered controlling growth in bonuses and compulsory investment in the "Big Society Bank".
The Bank of England is monitoring how the agreement is followed and is due to report shortly.
Regular readers might be suffering from deja vu: Lord Myners promised more lending to small firms back in 2008 when the multi-billion pound bank bailout was first announced. ®
We're in this mess because people over borrowed and you're wondering why banks now have much tighter restrictions on lending...
Mutually exclusive requirements
The banks MUST be compelled to stop lending money out willy-nilly, and they also MUST be compelled to lend out more money to anyone who wants it!
But the people they lent to were different.
In the US they were people with no income and no credit, and in the UK they were loans and credit cards which assessed people as being able to make repayments which were more than their wages (if any).
They were also mortgages backed up by endowments with faked performance, leading to them being worth about 50% of their projected minimum worth.
The mess was not caused by banks giving loans to businesses or private individuals who had some visible way of paying them back.