So Barclays Isn't Into Magic After All

Several banks promised to make funds available to SMEs as part of 'Project Merlin' in order to promote economic growth. Barclays was one of them.

Unfortunately, and even as Barclays was promising the Chancellor that it would boost loans to small firms this year, the Bank advised customers with turnovers of less than £5m a year that it would no longer provide them with asset finance - money that would enable them to buy machinery, office equipment, and vehicles. In effect, having committed to give more credit, the Bank withdrew essential lines of credit from thousands of its existing customers.

A spokesperson for Barclays stated that clients who could no longer rely on the Bank for asset finance could still 'tap the bank for alternative sources of finance such as working capital loans, overdrafts and term finance through loans and commercial mortgages' - which all sound like very expensive options to me.

Frankly,my advice to SMEs who have been using Barclays is to take their custom somewhere else - preferably to an organisation that is prepared to live up to the commitment it made to the Chancellor, and has a real interest in promoting economic growth in the UK.