Banks are shortchanging SMEs with cost of credit
The argument over whether small businesses are being denied access to credit rages on, but one thing is for sure: the money that is being lent is not getting any cheaper despite the Funding for Lending Scheme that was intended to cut the cost of funding for banks offering credit to small businesses.
New figures from the Bank of England reveal that the average cost of loans of less than £1m to privately owned non-financial businesses was 3.8 per cent over the three months to the end of August.
And guess what the rate was during the three-month period that ended in July 2012 when Funding for Lending was launched? That’s right – 3.8 per cent.
Critics of the scheme say the banks are the problem. “These figures suggest that while banks are able to receive the taxpayer-funded cuts in the cost of their borrowing, they still haven’t been passing this reduction on to small businesses,” says Philip White, the chief executive of specialist financier Syscap.
“As a result, those small businesses are not reaping the full benefits of a policy stimulus which was designed to help them.”