Wednesday 23 September 2009

CONCERNS RAISED OVER SCOTTISH SMALL BUSINESS BANKING.


CONCERNS RAISED OVER SCOTTISH SMALL BUSINESS BANKING.

LLOYDS AND RBS CONTROL 70% OF SMALL BUSINESS LOANS.

SNP MSP Christopher Harvie has raised concerns over the ability of small businesses to access finance as a report from the Scottish Government’s Chief Economist shows 68% of the market is dominated by the two state owned banks RBS and Lloyds Group.

The report shows small firms have been finding it harder to access overdrafts or loans and are increasingly using other forms of finance such as credit cards or family and friends.

Speaking ahead of a presentation on the issue to the Scottish Parliament’s Economy Committee by Scotland’s Chief Economist Dr Andrew Goudie, Committee member Professor Harvie said:

“This report raises serious concerns over the state of the banking industry for small businesses.

“Lloyds and RBS have over two thirds of the market between them. That is not good for competition and not good for Scotland’s small businesses.

“As Dr Goudie’s report makes clear, the slightest policy change from either of these banks and Scotland’s small businesses will feel the effects. That gives these banks a disturbing amount of control over the fate of Scotland’s small businesses.

“While the Scottish Government has taken steps toward the establishment of a Scottish Investment Bank which may offer a new route to finance for small businesses the UK Government has not used its shareholding in RBS and Lloyds to effectively encourage these banks to back small businesses and many have seen their overdrafts cut, loans rejected and charges increased despite running successful and profitable businesses.

“Banks need to be careful with the money they lend, but the issue of competition is one that was in place before the financial industry's recent troubles.

“It is important we can understand the impact the lack of competition in business banking has on Scottish business and look for ways in which businesses can be given responsible access to the finance they need to grow.

“It seems like the large companies and venture capitalists have no trouble getting hold of their loans but Scotland’s small businesses who drive our local economies and build our entrepreneurial spirit are those facing difficulty.”

The SME Access to Finance report by the Scottish Government can be found at:

http://www.scotland.gov.uk/Resource/Doc/919/0084113.pdf

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