Business leaders and members of the Treasury have strongly criticised as ‘inadequate’ the banks’ proposals for a small company fund of £500m.
The six biggest banks have each pledged to contribute £50m - £100m but have controversially asked the government to match their contributions using taxpayers’ money.
The heads of the six banks including: The Royal Bank of Scotland, Lloyds Banking Group, Barclays, HSBC, Santander and Standard Chartered are to meet chancellor, George Osborne and business secretary, Vince Cable this week to present their plan.
Liberal Democrat Treasury spokesman, Lord Oakeshott told the Guardian that the £500m proposal was not enough to help small businesses regain stability. He said: “These are banks that were bailed out by the taxpayer. The first item on the agenda must be how they are going to lend to small and medium sized businesses and not hand out the begging bowl to taxpayers yet again.”
The group of bankers intend to inform the business secretary and chancellor that their proposed scheme is similar to the Capital Enterprise Fund set up in April 2008 using cash from the Department for Business and high street banks.
The proposal comes after a three-month analysis by the banks to determine how they can effectively deal with the concerns of ministers and businesses that the economy does not have enough credit for a private sector recovery.
A spokesperson from the Federation of Small Businesses told Growing Business that: “We are pleased that the banks are looking into the problem of lending to small businesses, however, it is not just the amount of money that is available but the cost of finance that is an issue. Many small firms are worried that in approaching the banks for a loan, that it will trigger a complete review of their banking arrangements.”
© Crimson Business Ltd. 2010