HSBC has set up a new $5billion working capital fund for small businesses with £1bn allocated in the UK to help “fundamentally sound businesses” through the downturn.
Britain’s largest bank said the fund would aid small firms that aspire to trade overseas but also noted many would borrow from it just to meet their day-to-day “cash flow needs.”
Its announcement came last night, less than 24 hours before all the major banks face another stern sit down about lending to businesses with Lord Mandelson, the business secretary.
The banks have become frustrated with the government’s public attacks on them for not easing lending terms, but HSBC has claimed its lending level is already up on last year.
It now says it has found £1bn in new money, funded from its own resources, to be loaned using “normal” criteria to help firms “weather short-term shocks caused by the downturn.”
Under the terms of the fund, the bank’s managers are expected to use their understanding of the business market to “support those businesses where this help is most needed.”
Reflecting on the fund, HSBC’s chief executive Michael Geoghegan said the bank’s business customers were right to see how banks could help them through a “difficult time”.
“I am pleased that HSBC is using its financial strength to help our small business customers around the world by delivering this new $5 billion fund.
“Small and Medium-enterprises are the lifeblood of most economies and it is their success that will create economic growth.”
His comments follow other headline-winning initiatives for small businesses from their banks, including those by HBOS, Lloyds and RBS, which pledged to freeze overdraft rates.
Yet speaking on Friday, the Federation of Small Businesses said banks were still showing “Scrooge-like tactics” by seemingly not opening their reserves despite getting a £500bn injection.
Around a third of small businesses still struggle to get affordable credit from the banks, and, compounding the situation, 60% have seen sales decline and 40% are being paid late.
Getting the banks to be more “proactive and amenable in their lending practices” was vital, the FSB said, if an economic “disaster,” induced by collapsed firms and lost jobs, is to be avoided.
Dec 8, 2008
Email this article
Printer friendly page
Previous Page
