Cable pushes for banks to increase business loans

Business Secretary Vince Cable has asserted that banks must increase the availability of loans to small and medium-sized companies, and that he is prepared to use 'mandatory action' to force banks to do so.

He predicted a 'supply problem' could occur, which would hit loans to SMEs, and that 'this would intensify when the economy starts to grow'.

Banks have been saying that requests for business loans have been low, to which Mr Cable retorted: "If you push the hurdle high enough people are not even going to attempt to jump it."

The Liberal Democrat is working with Tory Chancellor George Osborne to address the issue. Cable explained that the banks' reluctance to lend to SMEs is a substantial problem in the aftermath of the economic downturn.

The private sector has a crucial role to play in the recovery of the British economy, says Mr Cable, and suggested that banks should "act in the wider national interest".

He aims to help private companies gain the confidence to grow, which would, in turn, boost economic growth.

"It's going to be very difficult in an environment where you have an enormous Government budget deficit to stimulate the economy through public spending. So the growth is going to have to come through the business sector, primarily small and medium-sized companies."

Increased liquidity in the lending to small businesses would have direct effects on the businesses for sale marketplace. Firstly, there would be a drop in distressed company sales, where this has been driven by cashflow difficulties. Secondly, better access to bank finance will help companies grow via acquisition, which is a strategy that is currently only available to those businesses with their own cash reserves or to those companies prepared to sell equity.

Share this article

Latest Businesses for Sale

View more businesses for sale