Bank lending: Welsh government review of business loans

Business Minister Edwina Hart expects a report in the autumn

A review will look at the difficulties faced by small businesses in Wales when they try to borrow from banks.

Business Minister Edwina Hart said it would also examine what other sources of finance are available.

It follows concern that high street banks are unwilling to lend to firms.

The Federation of Small Businesses (FSB) welcomed the review, which is due to report in the autumn, but said it must look at the Welsh government's own investment agency.

It will be led by Prof Dylan Jones-Evans, a business expert at the University of Wales and a former Conservative assembly candidate who chairs the party's economic commission.

Last August the Bank of England launched its Funding for Lending Scheme to try to encourage high street banks to make more money available for businesses.

However, Mrs Hart said Welsh small and medium-size enterprises (SMEs) told her they still found it difficult to get loans.

'Sustainable growth'

She said: "Access to external finance for business start-ups and investment for growth in Welsh businesses is fundamental to sustainable economic growth.

"The Welsh government is particularly keen to ensure that SMEs in Wales can access the finance they need to sustain their current operations and support their growth ambitions."

Prof Jones-Evans, who will be supported by government officials and a board of volunteer advisers, said: "There is considerable concern that the economic recovery in Wales is being held back because of the lack of capital for business to develop and grow.

"Whilst SMEs are arguing that they cannot access funding from financial institutions, organisations such as banks are saying the opposite, suggesting that there is plenty of funding available to support the sector.

"This review will try and move past the rhetoric and examine the reality of the situation, the solutions required to getting capital flowing into the Welsh business community and what the Welsh government can do to facilitate and support this process."

After examining whether bank lending meets the needs of businesses, the second part of the review will look at alternative sources of funding and the role the Welsh government can play.

The FSB said the review must also looks at Finance Wales - the Welsh government-owned funding provider which lends to businesses.

FSB Welsh policy unit chair Janet Jones said: "We have been fully supportive of the government's initiatives to offer alternative sources of funding through Finance Wales - and it is imperative that the review considers the success of Finance Wales in delivering government support to the businesses that need it most."