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Cable vs. Osbourne: Small Business Lending

With small business lending from the banks coming in for some serious criticism, any government action that is looking to make funds more accessible for SMEs is always to be welcomed. The increasingly stringent  requirements and general lending difficulties that small businesses are experiencing has meant that many companies are unable to get access to the funds they need not only for growth but also for day to day running. However, there’s a row brewing in the corridors of power – and this is to do with one of the new projects proposed to ease the plight of small business lending.

This disagreement between the Chancellor George Osbourne and the Business Secretary Vince Cable is about whether a new Government-backed bank should lend money directly to small businesses, or whether it should simply make existing schemes more accessible to SMEs. The Treasury has made it clear that the latter circumstances will be the case, with the new bank having no budget to channel funds directly to cash starved small businesses.

Cable, on the other hand, yesterday outlined a new, pro-active strategy and criticised the banks for failing to lend to small businesses. He is determined that this new state-backed bank will have the power to really make a difference to the country’s SMEs – and that means having the power to lend directly to small businesses. Of course, in the true style of British politics, the ongoing evolution of this disagreement between the Business Secretary and the Treasury is being phrased in diplomatic terms – as Cable stated, the ‘scale and scope’ of the bank is still being discussed. However, insiders have said that this is turning out to be a real battle between two opposing economic viewpoints.

So, will this new government initiative give small business lending a boost? Only time will tell.


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