The head of Barclays’ head of small business unit Steve Cooper has said that the bank will not be joining any government schemes that set targets for small business lending, in fact they will “refuse”.
Mr Cooper told the Financial Times that he felt any targets implemented would result in a repeat of the irresponsible lending that saw Britain spiral into the current situation.
He added that it may mean banks will start dishing out loans to meet figures rather than on the merits of the application.
The coalition government is currently looking at implementing nationwide business targets for all banks, nothing has been approved as yet but as the government had pledged to increase the cash flow for all small and medium sized businesses it is expected that something will be implemented soon.
Business Secretary Vince Cable has said that the targets could be implemented but with dividends and bonuses used as an incentive for banks in what was described my Dr Cable as a “carrot and stick” approach.
Recent figures suggest that a total of £598m in new loans had been authorised in June, £70m more than in May.
A new business has been launched to try and help smaller business and is called Funding Circle, it acts as an online market place allowing private lenders to offer money directly to smaller companies.
Funding Circle has estimated that typical interest rates charged on the loans will be between 6% and 9%, borrowers will pay the website a £50 fee to register and also 2% of the amount borrowed, but if this happens then the £50 joining fee will be refunded.