If you were attending to George Osborne on the 9th of February, you'll know all about Project Merlin - and if you weren't and don't, then you can find out all about it by visiting Real Business and reading Carryn Dewing's article, which you'll find under 'Finance'.Once you've done that, though, you might want to visit the Forum of Private Business , where you'll find that Phil Orford, the CEO of the FPB, has raised a very interesting question about the pledges made by the Banks as part of Project Merlin. Mr. Orford wants to know how the banks intend to increase the flow of credit to smaller businesses by 15% if, as they claim, demand for lending is down and applications are running at an 80% acceptance rate - which is exactly what I've been wondering myself.
As the Bank of England is going to be acting as watchdog to ensure that loans are being made available to businesses under Project Merlin, though - and particularly as honouring the commitment to provide credit to business is now going to be one of the performance targets used to determine bank CEO's bonuses! - I'm pretty sure that the answer to Mr. Orford's question will be revealed to all of us very soon.
Mr. Orford, in the meantime, believes that in order to fulfil their commitment to lend more, the banks are going to need to cut down on sector-based discrimination, be less punitive on viability assessments and more pro-active in securing up-to-date financial information from their clients and - very importantly - be prepared to communicate clearly what key assessment criteria are so that applications are more compliant with the lender's needs. I believe that he's right, but whether any of these modern miracles will come to pass is more than I can say.
Mr. Orford also had a message for all SMEs, and I think it's more than worthwhile passing it on: "... the banks," he said, " have committed to lend more. Test them on their commitment and get your applications in."
Good advice!
No comments:
Post a Comment