London (Reuters): A taskforce of six major British banks has unveiled a 1.5 billion pounds business growth fund to kickstart funding to small businesses in the wake of a sharp downturn in business lending after the credit crisis.
The fund will offer equity support to UK businesses with an average turnover from 10 to 100 million pounds and funding requirements of up to 10 million pounds, as part of 17 initiatives proposed on Wednesday by the British Bankers’ Association and the industry.
The banks involved are Barclays, HSBC, Lloyds, Royal Bank of Scotland, Santander and Standard Chartered.
They will build up an investment portfolio capped at 1.5 billion pounds over a number of years, which will be managed by an independent board and chairman.
“As banks we have an obligation to help the UK economy return to growth. The private sector will play a key role in the recovery and it’s our job to help viable firms to be successful,” said Barclays Chief Executive John Varley, who is also chairman of the taskforce.
Other initiatives include a new appeals process for customers, publishing lending principles, a mentoring system and a Business Finance Round Table that will bring together banks and business groups.
“This government has always insisted that banks need to increase lending to our essential small businesses, in order to support economic growth, while also restoring customer trust,” Chancellor George Osborne and Business Secretary Vince Cable said in a joint statement.
The taskforce was set up in July to assess the lack of lending to businesses and propose solutions, and more crucially, get lending to businesses moving again.
Lending to businesses has fallen more sharply than recessions in the early 1980s or 1990s said the report.