The Secretary of State for Business, Vince Cable, told the Business Innovation & Skills Select Committee yesterday that British small businesses were continuing to have difficulties accessing bank loans and overdrafts. He said: “Bank lending is not in great shape, but that’s not for the want of trying by government.”
Cable also noted progress on the government’s National Loan Guarentee Scheme which was launched in March as part of the coalition’s “credit easing” measures. 13,000 companies have applied for loans totaling £2bn. The scheme is intended to fill the void left by the banks’ reluctance to lend to SMEs.
Under the National Loan Guarentee Scheme, £20bn of cheaps loans have been made available to small businesses with a turnover of less than £50m per annum. The programme has now been extended to companies with a turnover of up to £250m.
One indicator of the difficulty that SMEs are having accessing vital and affordable is the new trend of SME loans springing up. PayPal joined the fray this month with a pilot of Merchant Cash Advances joining companies such as Iwoca, EZbob and Wonga for Business who are already servicing SME needs.