Government warns banks over small business lending

News emerged recently that the Business secretary Vince Cable stated UK banks should be ‘very, very self-conscious’ about how they reward staff and investors” ahead of the up and coming half years results.

High on Mr Cable’s agenda is placing an obligation to the banks to support small business and increase the amount of borrowing made available to them. The banks have come under much criticism from government and trade organisations such as the FSB and Chambers of Commerce to get credit lines moving again, albeit responsibly and the Business secretary warned that failure to do so may result in penalties.

Press reports speculate that such ‘penalties’ could be more super tax on profits and bonuses which have come under considerable scrutiny in the wake of the recession. Considering that the high street banks will next week report first-half figures that are forecast to reveal an estimated £5bn total bonus and pay pot for Barclays, HSBC and Royal Bank of Scotland and it seems bank bonuses will be headline news once more.

Interestingly a recent Reuters News report stated that despite the super tax, Wall St bankers based in their UK based foreign investment arms did not flee the UK, as was widely reported before the tax, in a banking brain drain. No such exodus occurred.

Whether the government flexes its muscles, and whether too much for the banks, or not enough for the public, one undeniable fact remains, that UK small business is still under supplied in terms of availability of finance.

UK late payments continue to rise and businesses failure as a result of late payments and poor cash flow are still prevalent despite the Prompt Payment Code. Cash flow is still the major concern for small business and without finance expansion is very difficult with already stretched cash flow levels.

When you consider that 99.3% of all UK enterprises are SME’s (small to medium enterprises) with less than 50 employees, the big question is can we afford not to support them?

With the UK banks passing the recent stress tests we can only hope that as the banks start to recover, so will the support to SME’s

If you want some advice on how to better protect your business from late payments, commercial debts, bad debt and customer insolvency simply get in touch with Liverpool Debt Recovery specialist CCDR and we can develop a suitable plan for you to manage everything from outsourced credit control through to debt collection and debt recovery or assisting you with debt mediation and/or dispute resolution.