Project Merlin banks let down the small business community

Figures from the British Bankers' Association show that whilst the overall lending target was exceeded, the five main banks in the UK failed to lend the requisite amount to smaller enterprises.

The Project Merlin target was £190 billion and the banks in fact made new loans totalling £214.9 billion. However, £76 billion of that should have been lent to small firms and that total fell short by £1.1 billion.

The banks were quick to defend themselves, saying fewer small firms approached them for credit. Many of the UK's smaller businesses collapsed during the economic crisis because they were unable to obtain credit. In 2010, the banks lent £66 billion to SMEs, so last year's total was an improvement.

John Walker, the FSB's national chairman, said he extremely disappointed at the bank's failure to meet their £76 billion target. He said it was all the more disappointing when you consider that the target for Project Merlin was artificially low.

He went on to point out that the government must urgently seek out alternate ways for small businesses to obtain credit and put in place its scheme for credit easing.

A spokesman for the Project Merlin banks explained that the figures demonstrated that the banks were committed to providing financial support to businesses that needed to grow. However, he said the Credit Conditions Survey from the Bank of England showed that small business demand for credit decreased in all but one quarter last year.

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