More than £20 billion was lent to small businesses by the nation’s leading banks over the past quarter, figures from the Bank of England show.

More than £20 billion was lent to small businesses by the nation’s leading banks over the past quarter, figures from the Bank of England show.

The figure is in line with the £76 billion annual lending target outlined by Project Merlin in a bid to hasten the economic recovery, after claims were made that banks were refusing credit to smaller enterprises.

However, lending for the first quarter fell short as the target was reportedly finalised one month into the quarter, creating a misleading figure.

The latest figure released by the Bank of England shows a lending surplus of around £2 billion.

David Birne, insolvency partner at the chartered accountants HW Fisher & Company says, ‘The banks will no doubt be patting themselves on the back for what appears to be an encouraging half term report.

‘Bitter experience has taught bankers to be less public in their popping of champagne corks than they were in the past. But they will surely be trumpeting this as a great achievement.’

However, Birne adds that his experience ‘on the front line’ is that targets or no targets, simply not enough lending is going on.

‘Nobody expects the banks to lend to the unbankable but in many cases they are even turning their backs on perfectly viable businesses,’ he adds.

‘Many struggling businesses don't even ask for credit as they feel sure the answer will be no, or that the interest rate will be prohibitively high.

'A few gold stars on the Project Merlin half term report will not deliver what the economy, and thousands of struggling small businesses, need – more access to realistic credit. Meeting such low targets is a pyrrhic victory for the banks – you cannot lubricate the engine of the economy with a thimbleful of oil.’

See also: Get your business back on track

Related topics: Bank of england, Lending targets, Project Merlin