Bank bailout backlash
Nov 05 2009
The bank bailout is not popular with SMEs
Small businesses have hit out against the government’s £39 billion bank bailout.
Under the announcement, the government will inject £39 billion into Royal Bank of Scotland and Lloyds, and force both banks to sell off a number of branches – a move demanded by the European Commission following concerns over competition.
Alex Ciangola, owner of London-based 4 hairdressers, says: ‘The government is completely out of order. They should give the money straight to small businesses rather than the banks. We’re the sector who will lift the economy out of the recession. I have no hope and no faith in either the banks or the government in helping us.’
Michael Morris, owner of Distinction Bespoke Tailoring, agrees: ‘It seems the banks are being bailed out while small businesses are being left without much help. Obviously, you need the banks to have money in order to lend. But I think now we’ve become even bigger shareholders we should see more leniency in their lending for our money.’
David Frost, director general of the British Chambers of Commerce, says if implemented properly the plans could increase the availability of finance to business.
He says: ‘The new banks must be well capitalised, and there will have to be changes to the current situation, which leads the banks to exaggerate risks associated with lending to smaller companies. It is vital that what emerges from this shake-up is a competitive system that offers business real choice.’
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