Wonga’s wake up call for Britain’s banks: it’s time to lend to small businesses

Last week’s news that lender Wonga (a provider of high cost short term personal loans) has launched a business loans service, promising to make funds of £3,000 to £10,000 available within 15 minutes of an application is a signal to banks and the Government that they are simply not doing enough to support responsible lending to Britain’s small business community.

Sage and many other champions of small businesses have been raising concerns about firms struggling to access finance for years now. Changes to bank lending have to come.

Our recent UK omnibus of more than 1,000 Sage customers showed that a quarter of UK businesses are optimistic about their business prospects in 2012, but 84% of them do not believe the Government has done enough to support the business community in the past 12 months.Brendan Flattery

We are a nation of entrepreneurs, whose drive and self belief are an inspiration for economic recovery, but businesses cannot succeed on their own.

Last week’s revelation from the Bank of England that banks have slashed their lending to small business by £100bn since 2008 only adds further evidence to the growing problems of access to finance.

These concerns have fallen on deaf ears by the Government and banks, so will this new arrival to business loans be the wake-up call that they need?

More must be done to provide our backbone of Britain’s economy with access to affordable and viable long-term finance at a time when they are struggling with cashflow and fighting for their survival in today’s tough economic conditions. Putting pressure on financial institutions to lend money to small businesses is one of the top 3 changes SMEs want to see the Government implement to improve UK business conditions.

It’s never been more important for the Government to show it’s listening and taking action. I believe firmly that the Government needs to promote a culture of lending to businesses at favourable rates and open up alternative routes of non-bank finance, such as the coalition’s £1.2billion Business Finance Partnership.

Brendan Flattery, CEO Sage UK and Ireland