Banks: Lending

House of Lords written question – answered on 25th January 2010.

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Photo of Lord Dykes Lord Dykes Spokesperson for Foreign and Commonwealth Affairs, Spokesperson for Environment, Food and Rural Affairs

To ask Her Majesty's Government what assessment they have made of the level of lending by the United Kingdom retail banking sector to small and medium-sized enterprises; and what steps they will take if they conclude it is not lending enough.

Photo of Lord Davies of Abersoch Lord Davies of Abersoch Minister of State, Foreign and Commonwealth Office, Minister of State, Department for Business, Innovation and Skills, Minister of State (Department for Business, Innovation and Skills) (Trade, Investment and Small Business) (also in the Foreign and Commonwealth Office), Minister of State (Foreign and Commonwealth Office) (UK Trade and Investment) (also in the Department for Business, Innovation and Skills)

SME lending data collected by BIS show that while it is true to say that demand for finance remains subdued and new lending is down comparatively with 2007, the large majority of SME applications for finance are successful.

The Government continue to monitor the situation closely, for example the experiences of both lenders and borrowers are discussed regularly at the Small Business Finance Forum.

While continuing to encourage lending to viable SMEs, the Government have agreed lending commitments with RBS and Lloyds. Lending Commitments will also be in place for next year up to March 2011.

In addition, over £750 million of loans have been offered to SMEs through the enterprise finance guarantee, which has been extended to 31 March 2011, and the Government are working to establish a growth capital fund which will supply risk capital to established SMEs of between £2 and £10 million.

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