Small firms told to borrow more to grow

This is a follow up on my blog post yesterday.Banks are back on the front foot now with a new campaign aimed at encouraging small firms to grow. Incredible as it may seem, after years of being told they are not lending freely enough, banks are now arguing small firms need to be more confident in applying for credit.The British Bankers’ Association’s (BBA) campaign argues 270,000 businesses could get a boost if only they applied for funding. Of course, it’s not the applying for funding that’s important but rather getting the money itself. Maybe, I’m being too pedantic today.The BBA research has found 37 per cent of firms considering applying think they will be successful – in fact, the BBA said, 67 per cent will get a loan.And its plan should receive a boost as recent Bank of England figures show loans to small firms are on the up at last. But this seems to contradict what we’ve been told earlier this month.It is thought the Treasury was involved in encouraging the campaign in the hope that it will encourage small firms to borrow, and give them confidence that the financial crisis is over.

The story was reported on here.

Meanwhile, we learn today that RBS has been treating some small business customers “roughly” and can worry others by passing them around from department to department, Sir Andrew Large, the former deputy governor of the Bank of England  said yesterday. He told MPs the bank was poorly structured to encourage small business lending, and could give the perception that it cared only about making money from those businesses.

However, he stopped short of the claims made by business department adviser Lawrence Tomlinson, who claimed the bank was forcing firms out of business to seize their assets.

This story was reported here.