BUSINESSES CAUGHT IN BANKING “CATCH 22”

BUSINESSES CAUGHT IN BANKING “CATCH 22”

The SNP has challenged the UK government to investigate the workings of the Enterprise Finance Guarantee Scheme which they say is failing Scottish businesses.

Business and Enterprise Spokesperson Mike Weir MP raised the issue in the Commons today, pointing out to ministers that several businesses had contacted him to complain that although they fitted the published criteria for the scheme the banks would simply not lend to them.

Commenting on the response from Business Minister Ian Lucas that the scheme was working well, Mr Weir said,

“Ministers are simply burying their heads in the sand over the complete failure of this scheme to help small businesses. I have been contacted by several businesses who have been rejected although they fit the published criteria.

“The most common reason is that the banks are now so over cautious that they will not lend if the business has suffered a downturn over the last year. How many businesses have not had a downturn during the current recession?

“The minister stated that individual cases should be raised with him, but when I have written to ministers they have simply said that individual decisions are up to the banks.

“Businesses are caught in a “Catch 22” situation where the Government insists money is available but banks won’t lend and no one will take responsibility. This is absolutely ridiculous.

“Taxpayers have spent billions bailing out the banks. The UK government needs to get a grip and force banks to honour their commitments on business lending.”