Hopes that small business lending forum may get reprieve

5 July 2010

There are hopes that a business lending forum set up by the last government may survive the current administration in some form.

The Small Business Finance Forum was established in 2008 in an effort to encourage banks to step up lending to SMEs.

With the new government keen to review the role that the state plays in industry and business, fears were expressed that the forum may be dropped.

However, Vince Cable, the Business Secretary, could persist with the forum in some form.

In a speech last month, Mr Cable said that he would redouble government efforts to ensure that lending agreements from banks that have benefited from taxpayer subsidies are being honoured, especially for small and medium enterprises.

He announced: "We do not expect to see viable businesses deprived of credit or working capital by banks that are largely owned by the taxpayer, or the general beneficiaries of wider public support.

"The current risk aversion by banks in the small and medium enterprise sector will stifle recovery and, if it does, will actually rebound on the banks through bad debt."

A spokesman for the Federation of Small Businesses, one of the groups that used to attend the forum, but which hasn't met since the general election, said: "We want the forum to carry on. The banks were there, and they were open to criticism and liked the praise when we thought things were working. It needs to carry on for the Enterprise Finance Guarantee to prosper."