British Chambers of Commerce calls on banks to change attitude

THE BRITISH Chambers of Commerce is calling on banks to once again rethink their attitude towards small businesses as government figures are tomorrow expected to reveal that lending to the SME sector is behind target.

The BCC says that improving the broken relationship between SMEs and the financial sector is about more than just satisfying national funding goals and extra support is needed at a local branch level.

Lending targets agreed this year under the "Project Merlin" accord between banks and the Treasury are forecast to show that the sector is behind with commitments to small firms.

If lending continues at the current rate, analysts believe the banks could fall 13 per cent short of the 76 billion they pledged to lend to SMEs over the year.Tomorrow's figures are expected to show just 17bn has been extended to the sector so far. However, the banks are thought to have kept pace with funding targets to the large corporate sector.

David Frost, director general at the BCC, said: "The long-standing challenge around small business lending remains. Throughout the recession and even now, businesses tell us that their relationships with banks have suffered tremendous strain. There has been a crisis of confidence between businesses and banks created by years of over-centralised processes, opaque decision-making and a lack of good local relationship-managers available to businesses customers.

"Missed targets to lend to small businesses are disappointing, but they are only a part of the story. Banks have to think about how they talk to business customers and be ready to make decisions at a local level about their financing needs."