CBI calls for change on lending to SME’s

Industry leaders have this week called for a change on lending to small businesses, following the news that most of them are still finding it difficult to access finance.

The Confederation of British Industry stated the need for a new commercial lender that is committed to providing funding to SME’s. They say this is imperative to the future growth of British Industry. The CBI Director General, Richard Lambert, said small businesses are struggling to obtain credit, no matter how good their business model. He said he is “especially concerned about the availability of finance for small companies” in Britain that “can’t issue equity, bonds or commercial paper at a sensible price” and for whom “there is no ready substitute for the small handful of very large bank lenders”.

The CBI has stated they want to see localised lending become more prominent, with the emergence of new regional, financial institutions. They are set to continue discussing these ideas at their annual conference this week.

In similar news, the Government has welcomed the publication of the independent review by Chris Rowlands this week. The Rowland’s Growth Capital Review states that a permanent gap exists for businesses looking for between £2 million and £10 million in growth capital and that neither banks nor equity investors would be likely to fill the gap in the near future.

He believes the Government should intervene to address this market failure because the growth of SME’s is essential to the economic recovery.

Business Secretary Lord Mandelson said; “I welcome the conclusions of this review by Chris Rowlands. It is now for Government and the market to work together to address these issues effectively. It is vital that UK SMEs can secure the investment they need to grow.”

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