In an embarrassing blow to the Chancellor’s Project Merlin agreement, official figures reveal that Lloyds Banking Group, Royal Bank of Scotland, Santander, Barclays and HSBC had missed gross lending targets for small businesses in 2011 by more than £1bn.
Royal Bank of Scotland, 83 per cent-owned by the taxpayer, is regarded as the biggest culprit.
Under the Project Merlin agreement, Britain’s top five banks said they would increase lending available to SMEs to £76bn this year and boost lending available to all businesses to £190bn.
No lending targets have been set for 2012.
“The banks are not entirely to blame as we are still clearly facing the problem of a depressed demand for any type of finance. Our own statistics show that almost a third of SMEs have no plans to invest in growth this year,” comments Peter Ewen, MD of Venture Finance and Chairman of the International Factors Group.
“Project Merlin had good intentions to help SMEs and boost the wider UK economy but it may have ended up being a box-ticking exercise. It’s telling that lending targets will not be imposed on banks going forward.”
Do small businesses even care about Project Merlin? Late last year, solicitors Mishcon de Reya and the London Chamber of Commerce and Industry surveyed business leaders across London and the south east, using pollsters ComRes. Nearly 45 per cent of respondents were completely unaware of the Project Merlin agreement and less than five per cent of those who had heard about Merlin were encouraged to apply for bank funding as a result.
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