Small business lending up say banks

Finance
Written by Paul Williams
Friday, 12 March 2010
BBA seeks to defend bank reputation on lending. Lending to small businesses is increasing according to the organisation that represents the majority of the UKs high street lenders - the British Banking Association (BBA). Related Articles: RBS, Lloyds Banking: Lower lending targets please SMEs operating out of cash flow Lending to SMEs increases Lloyds Banking Group, RBS reassure on SME lending SMEs still accessing funds New lending to small businesses of £534mn in January followed a seasonally low total of £511mn in December. A rise in overdraft lending in January was consistent with a similar rise a year earlier. A significant fall in deposits was partly a reaction to an unusual large rise in December (as businesses retained cash), and partly the usual fall seen at the start of a year. BBA statistics director, David Dooks comments, "The start of this year saw the monthly value of new lending remain above £500mn a month. Lending to this particular part of the business sector has grown by 2% over the last year, even with the winter months seeing the usual lower demand for bank finance and comparisons with the same time a year ago showing relatively weaker lending. "Trading conditions for small businesses continue to be difficult, but after Decembers seasonal low number of new relationships, it is encouraging to see small businesses opening bank accounts in similar numbers to previous months." Lending row While lending to small businesses may be up 2010 has been dominated by public and political anguish over falls in overall business lending. Last month data from the Bank of England showed that lending to businesses fell by £4.3bn in December alone and was down in the fourth quarter, accelerating the decline in lending during 2009. Lending fell across all the main sectors of the economy for the third consecutive quarter in the last three months of 2009 but was largely flat for property, which accounts for nearly 50% of the total stock of business loans and cushioned the extent of the fall in lending to other businesses. Lending by banks to companies fell last year for the first time since records began in the latest illustration of the banking industry's reluctance to provide finance to businesses and another sign of the fragile state of the economy. The Treasury is now reviewing lending targets for state-supported Lloyds Banking Group and Royal Bank of Scotland after an 8.1% fall in the stock of loans to businesses year-on-year provided fresh evidence that the banks will not grant the required £27bn of business loans by March. RBS must lend £16bn to businesses and Lloyds £11bn in return for taxpayer support for their bad loans. The commitments for RBS to lend £9bn in mortgages and Lloyds £3bn are more likely to have been met, though the Council of Mortgage Lenders admitted today that home loans had hit a 10-year low. Share this: digg del.ico.us Newsvine Reddit Furl technorati Facebook Comments (0) Subscribe to this comment's feed Post a comment Name (required) Email (required) (not published) Website Title By posting on this website you are agreeing to abide by our website comment policy and all posts are subject to the approval of the website editor. We will remove posts that contain offensive or threatening language, personal attacks on the writer or other posters, posts that are off topic and posts that are considered spam or specifically used to promote any commercial products or services. Any poster who repeatedly contravenes the policy will be banned from posting on the website.