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Panel launched to monitor Banks' small business lending

DEPARTMENT FOR BUSINESS, ENTERPRISE AND REGULATORY REFORM News Release (2008/260) issued by COI News Distribution Service. 11 November 2008

Business Secretary Peter Mandelson today announced the creation of a new panel to monitor how banks are lending to small businesses.

The five major high street banks reached an agreement with the government to provide data on the availability, risk and overall cost of lending to small and medium sized businesses at the first meeting of the Small Business Finance Forum.

Detailed talks will now be held with each of the banks to reach individual agreements on the provision of data to the panel.

The monitoring panel will be made up of senior Department for Business and Treasury officials and representatives from the Bank of England. It will monitor and enter into a constructive dialogue with individual lenders on the availability, risk and overall cost of SME lending.

The Forum also secured an agreement from the British Bankers' Association to work with Small Business organisations to fundamentally revise the Statement of Principles which set out how banks and businesses work together.

Business Secretary Peter Mandelson said:

"It is critical we understand what finance is available for small businesses and this monitoring panel will give us greater insight into the situation at ground level.

"The panel, together with the revised Statement of Principles, shows a commitment to making progress on resolving the credit issues faced by small businesses.

"I want this Forum to make a difference. We have opened up a dialogue between SMEs and banks, and we will continue to work together to make sure we have the resources in place to see UK plc through this difficult economic climate."

Banks, businesses and government also discussed the need to increase awareness of the support and information available to help companies to manage cashflow.

Consultations with business and finance organisations revealed a number of companies feel they do not have access to the right advice they need on financial management.

The Government, in partnership with the Institute of Credit Management, has produced a series of quick, user-friendly guides designed to provide this support direct to businesses. Forum members will now promote the guides over the next few months.

The Forum's Terms of Reference and membership were also agreed at the meeting.

Notes to Editors:

1) The Small Business Finance Forum will meet regularly throughout the lifespan of the current economic downturn.

2) The first meeting was held at 3.30 p.m. on Tuesday 11 November at the BERR Conference Centre.

3) The guides are available online through http://www.creditmanagement.org.uk/berrguides.htm

4) The banks and business organisations are supporting and promoting the guides: HSBC, Lloyds TSB, Barclays, CBI, FPB, FSB, IOD, EEF, BCC, BBA, HCC, International Insurance Company, NSCC National Specialist Contractors Council, ABFA, ACCA, CPA, CSA, CIPS

5) Small Business Finance Forum - Terms of Reference

1. The Small Business Finance Forum (SBFF) will be chaired by Business Secretary, Peter Mandelson, and attended by Shriti Vadera, Minister for Competitiveness and Small Business. It will comprise of 7 UK banks (RBS, Barclays, HBOS, Abbey, Lloyds TSB, HSBC, Standard Chartered), the Bank of England, the British Bankers' Association (BBA), key small business representative bodies (CBI, BCC, IoD, FSB, FPB, SEC, EEF) and individual entrepreneurs and small businesses. It will also include representation from the Regional Development Agencies (RDAs), BERR's Access to Finance Expert Group, the Women's Enterprise Taskforce, the Ethnic Minority Business Taskforce, the Department for Business, Enterprise and Regulatory Reform, and HM Treasury.

2. The forum will bring together Government, banks and small businesses to:

* Have an informed debate on issues pertaining to financial conditions facing banks and small businesses and an opportunity to openly raise concerns.
* Identify advice and information for Government, banks and small business representative bodies to communicate internally within their organisations and externally to their members, customers and small businesses.
* Identify areas of concern, interest and actions in relation to access to finance, including barriers to SME access to finance.

3. The forum's discussion will be informed by BBA's emerging data on market conditions for SMEs and any survey data from members of the forum.

4. Members attend in a voluntary capacity and receive no remuneration. The lifespan of the Forum will be limited to the current economic downturn and kept under review until the economy recovers.

Department for Business, Enterprise & Regulatory Reform
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http://www.berr.gov.uk