We’ll lend money for you, BCRS tells banks

BLACK Country Reinvestment Society (BCRS) chief executive Paul Kalinauckas has offered to help banks with small business lending.

His offer follows the Bank of England’s decision to provide billions of pounds of cheap credit.

“Put simply, we borrow money off the banks to lend to the businesses they won’t lend to,” Kalinauckas said.

“We have a successful track record of ensuring bank funding reaches the smaller business that most need it and already draw down wholesale funding from one bank. We could do a lot more if other banks joined in.”

The chairman of Unity Trust Bank, Graham Bennett, endorsed the Black Country Reinvestment Society’s approach. He said “By providing wholesale funding the bank is able to use its funds to make available micro finance loans available to small businesses.

“This is just one example of how we can play a role in pump-priming the all-important local economy.”

The Bank of England’s announcement of the plans last week comes in response to the worsening economic outlook. Together with the government, it will provide billions of pounds of cheap credit to banks to lend to companies.

However a recent government report “Boosting Finance Options for Business” predicts that there will be a finance gap of between £26bn and £59bn for small businesses seeking funding over the next five years and warns of the significant risks involved in relying on bank lending as the sole source of finance.

Kalinauckas added “The availability of credit needs to increase as the economy recovers but it has to be done in a manner that is easily accessible to small businesses that do not have the resources of larger companies.

“We need to promote access to locally based small business loan funds such as BCRS who are geared up to lend to smaller businesses, the majority of whom turnover less than £1m per annum and fall foul of banks’ credit risk assessments.

“We keep hearing about billions being pumped into the banking system but the reality is that it is not getting through to small businesses. Our model enables this to happen as we can manage the risks of lending better than the banks.”