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Banks Agree to Free Up Credit for Small Businesses

Wed, 10 Dec 2008

Banks yesterday promised to make it easier for small businesses to get access to credit during talks with the government . The Business Secretary, Peter Mandelson, held a meeting with lenders and small business groups in a bid to resolve the current stalemate. Following the talks, banks agreed to a new ‘statement of principles’ covering lending to small businesses, whilst also agreeing to cut the time it takes to transfer business accounts from one bank to another from ten to five working days. Meanwhile, another new agreement could see fewer personal bankruptcies resulting from business collapses as banks have agreed to consider business assets such as securities before business owners’ personal assets .

The Federation of Small Businesses said the agreement was ‘very welcome’, following complaints from business groups that it is increasingly difficult to secure the necessary loans and overdraft facilities despite the billions of pounds of government aid received by the banks. The meeting was part of a wider government plan to encourage greater lending from the banks. A new lending panel meets for the first time on Thursday, designed to bring together ministers, banks and building societies, as well as regulators and consumer groups.
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