Back in February, as part of their penance for almost bankrupting us all, the UK’s five biggest banks entered into Project Merlin, a scheme by the Government to allow better access to credit and loan facilities to UK businesses. The total amount of capital to be made available was £190 billion, of which 40% (£76 billion) was earmarked specifically for small businesses – a total of £19 billion every quarter.
The banks involved with the scheme (Lloyds Banking Group, HSBC, Barclays, Royal Bank of Scotland and Santander) missed their lending targets for the first quarter, but have bounced back in Q2, lending a total of of £53 billion, with almost 39% of that total (£20.5 billion) going to small and medium-sized firms.
With hazards besetting freelancers, contractors and small businesses from every angle – be it HMRC’s poor performance, the increasing cost of compliance, increasingly late payments from large corporates, or troublesome legislation such IR35 or the Agency Workers Regulations - it is at least heartening to hear that the countries biggest banks are keeping up their end of the deal.
Although the Project Merlin banks were criticised in March for failing to meet their agreed lending targets (all except Santander missed their individual goals), many of the banks pointed to the fact that small firms simply weren’t seeking credit and loan facilities due to the continuing uncertainty in financial markets, and the wish to not accrue more debt.
The fact that around 39% of the available funds went to SMEs in Q2, as opposed to just over 35% in Q1 may be an indicator that small businesses are finally beginning to regain confidence in banking institutions as a source of funding.
