Nathalie Thomas: Shawbrook talks a strong game but has yet to convince that it can deliver

SINCE the outbreak of the credit crunch, the tortured issue of small-business lending has become so complex that it nearly proves the theory behind the Münchhausen trilemma – that no truth can be proved with any certainty.

On the one hand, the banks swear blind they are open for business but claim they face a lack of demand from small enterprise. On the other side of the fence, small businesses complain they are being turned away or the rates on offer are extortionate.

Despite numerous efforts on the part of government and the banking industry itself, where – and with which side – the problem lies still remains shrouded in mystery.

Thankfully, as with all big philosophical questions, that hasn’t stopped newcomers from seeking to find the answer and yesterday some of the biggest names in the business stepped into the arena.

Chairman of the board of new bank Shawbrook is Sir George Mathewson, former chairman and chief executive of Royal Bank of Scotland. He is joined by Sir Brian Ivory, the former boss of Highland Distillers, and Owen Woodley, who spent 20 years with Barclays.

This venture joins other recent market entrants, such as Metro Bank and Aldermore, in seeking to break up the might of the “big four”.

Interestingly, Essex-based Shawbrook is 100 per cent owned by RBS Equity Finance – an independent arm of Mathewson’s former employer.

However, chief executive Woodley went to great pains to distance the bank from RBS, stressing that its ownership structure would not prevent it from competing with the taxpayer-backed organisation.

Around 87 per cent of the funds used to create the bank “came independently of RBS”, he said, while RBS Equity Finance is “answerable to its investors who are, for the most part, not from RBS”.

To reinforce the point that Shawbrook is not a satellite of the great RBS mothership, Woodley has come out all guns blazing on the side of small firms, claiming that procedures for accessing finance from high street lenders are “unclear and obstructive”.

Shawbrook’s ownership structure will be of little concern to SME owners if Woodley delivers on his promises of fair rates and faster decisions on lending applications.

But small firms have heard promise after promise about better access to finance. So it’s little wonder that the launch was given a “cautious” welcome by organisations such as the Forum of Private Business (FPB).

The FPB points out that while another competitor in the market is welcome, Shawbrook’s business model won’t replace the traditional relationship banking of old – particularly as its model is closer to a form of asset finance. Lending will be made against property, which isn’t suitable for all SMEs, it says.

Colin Borland, of the Federation of Small Businesses in Scotland, also argues that the venture may face a challenge in finding the firms to access its services. Shawbrook is shunning a branch network and will work instead through independent financial advisers.

But as Borland highlights, it’s not the first instinct of most small business owners to go to a broker or middle-man in order to secure an overdraft or loan. The majority still prefer, in the first instance at least, to pop into their local branch and discuss their requirements face to face.

No doubt with heavyweights such as Mathewson and Ivory behind it, Shawbrook is likely to make something of a splash over the coming year but with only £250 million at its disposal – a sum that has been described as “pocket money” by one sceptic – it’ll be a while yet before the SME lending dilemma is resolved.

SNP takes a gamble in sending an unhealthy message over levy

WHEN John Swinney announced a “health levy” in last month’s Scottish Budget, it was immediately branded “the son of Tesco tax” by business groups who failed to see the difference between this latest supplement and last year’s big retail tax, which was defeated by parliament.

Perhaps a more appropriate name, however, would be the “local government booster tax” after it emerged last night that the levy, to be raised through business rates, will be channelled directly to local authorities, who will be able to spend it as they see fit. There will be no strict requirements for the money to go towards public health campaigns or the like.

The Scottish Retail Consortium, whose members yesterday met with Swinney, says this revelation proves that the levy is nothing but a revenue-raising exercise and has little – or nothing – to do with improving public health.

At time when the economy is staring down the barrel of a gun, the government is taking a mighty gamble by sending a message to large businesses that they will be used as a cash cow to balance its books.