Greedy lenders mustn’t punish our small firms

Arampaging pandemic ought to have been a golden chance for the big banks to redeem themselves. after all it was taxpayers who helped save them from extinction in the financial crisis 12 years ago.

But even now as the government and citizens face a battle to save lives and secure the nation’s future prosperity we learn that some lenders are prepared to impose ruinous terms on SMES – small and medium-sized enterprises.

Britain’s 5million small businesses are the backbone of the economy and employ most of the workforce. if they go under because of unscrupulous behaviour by the banks, we could face a prolonged rather than short-term recession and more years of hardship.

The Corona Business interruption Loan Scheme unveiled by Chancellor rishi Sunak last week promised to haul SMES back from the brink as the virus brought the economy to a screeching halt.

now we learn that in spite of the government’s promise to guarantee up to 80 per cent of billions of pounds of loans made to the sector the banks are being far from forthcoming in advancing credit. applicants are being kept hanging on the line for hours when they are trying to save businesses and keep staff in work.

Even worse, Barclays, HSBC and Lloyds are still demanding that directors put personal and business assets on the line as additional security for the loans.

Only royal Bank of SCOTLAND-NATWEST, in which the state has a 62.4 per cent stake, is looking to play fair.

Barclays is allegedly telling some customers that when the interest rate holiday ends, after a year, they will demand as much as a 7-12 per cent return. Barclays denies this but it comes when the Bank of England has cut its base rate to a record low of 0.1 per cent.

The idea that the banks would seek to punish firms that survive coronavirus is enough to take the breath away. When the finance system was hours from catastrophe in 2008 gordon Brown’s government and the Bank of England came through with a colossal bailout. This included pouring hundreds of billions of pounds into the money markets and guaranteeing million of mortgages.

Taxpayers picked up the bill for the banks’ recklessness and lived through gruelling austerity in which incomes were squeezed and public services slashed.

The bankers again seem to be losing their ethical compasses – they usually only do the right thing when shamed into it.

BARCLAYS, for example, has been forced to climb down on withdrawing services from customers at post Office counters. and it was only in the past 24 hours that it waived heavy overdraft charges for hard-pressed families until the end of next month.

The Johnson government has moved heaven and earth to try to keep firms alive and ensure that growth and employment can eventually return.

That cannot happen if the banks insist on playing hard ball with small businesses, consumers and large corporates. By imposing harsh terms on SME borrowers they betray the broader public interest.