Elusive finance could be blow for export trade

Former HSBC chairman Stephen Green has said a lack of financing options for businesses could threaten international trade.

The latest plea for banks to lend more has come from a former HSBC chairman.

Trade minister Stephen Green has said that bankers must deliver on their commitments under the Project Merlin deal to increase lending to small businesses, warning that efforts to boost exports will be hamstrung if small and medium-sized enterprises do not have access to finance, the Financial Times reports.

Until now, Lord Green has refused to comment on the banking sector since taking up his junior ministerial post five months ago. I suppose it’s only natural to want to distance oneself from the topic after the damp squib of Project Merlin. Last month, the complaints made by frustrated finance-seeking small business owners across the country were substantiated with cold, hard facts about lending. The ‘big five’ banks pledged to lend £19 billion in the first three months of the year. However, just £16.8 billion had actually been dished out. Now, Green has pointed out that so far we have seen just one quarter’s worth of numbers on a year’s commitment to boost lending by 15 per cent.

It’s not good enough, but as long as we have lobbying groups putting the pressure on the banks, the voice of small businesses will at least be heard. Last month, chief executive of the Forum of Private Business Phil Orford stressed that a shift in power needs to happen in terms of who gives out the loans. ‘There is a widening knowledge gap when it comes to lenders’ ability to gauge small business risk,’ said Orford. ‘We want to see banks invest in regional services and hand decision making powers back to local branch managers who are best placed to make key lending decisions based on realistic assessments of individual businesses. We must move away from the over-centralised, tick-box mentality we are seeing now.’

It is especially frustrating to see the shortfall in lending considering that business confidence in international trading is on the increase. Some 68 per cent of importers and exporters are confident that international trade conditions will improve over the next 12 months, according to the latest business confidence index from Travelex. At a time when there seems to be so much promise in an export-driven economic recovery, for companies to be unable to get the momentum going through lack of funding options is rather heartbreaking indeed, and it seems there is a long way to go until these growth barriers can be overcome.

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International Trade

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