Following state support and the inclusion in the Government’s asset protection scheme, RBS was meant to make an extra £25 billion of credit available for individuals and businesses both this year and next, Lloyds was instructed to lend an extra £14 billion.

However, with Bank of England figures showing that lending eased off again in the month of April and small businesses reporting that they are still unable to secure credit; the banks have warned that it is likely they will miss their lending targets.

According to the Sunday Telegraph, RBS and Lloyds have stated that the problem is not the supply of credit, but the lack of demand from large companies that are trying to repay debt.   

Kevin Cooke, sales and marketing director at commercial lender, Business Lending, believes that despite their protestations, banks are still reluctant to take on the risk of lending to small businesses.

“The recent announcement by Lloyds to make 625 staff redundant from their SME lending division really sums it up. We are seeing many excellent quality cases presented to us at Business Lending that have been turned down by high street banks for it seems no real reason.” Mr Cooke commented. “With what we hear from our brokers there is ample proof that there is still a huge gap between the hype of increased lending and the reality.

“After all the money that has been poured into banks by the government, with the proviso that they begin to lend again, this latest redundancy news in the very department which is crucial to new lending is a slap in the face to SME’s. There is a crying need to help good businesses and we know from the cases we see that there is a tremendous opportunity to not only offer assistance to hard pressed SME’s but also to generate rock solid new business lending which will stand any stress test and generate good returns.”