Big six make a small concession to business lending

There was progress of sorts when the big six British banks trotted round to Downing Street to present their findings on small business lending. Inevitably, the document included the familiar (and less than wholly convincing) statistics that the banks have kept the taps open. But there was also an admission that there is an unmet demand for lending. That's a start. However, the headline act – a £1.5bn fund to invest in viable business – appears a modest affair. The actual sums being coughed up by the six banks initially will be £300m-£350m in aggregate. The figure of £1.5bn refers to the eventual ambition for the size of fund, to be achieved at an unspecified time. Yes, companies with more equity can raise more debt. But £300m is equivalent to 60 investments of £5m each – that, you suspect, will not be enough to kickstart growth in the SME sector. The important thing is how the banks behave if the fund finds a queue of viable businesses at its door. Will more cash be forthcoming and how soon? Will outside investors be fast-tracked to add to the coffers? There are questions there, too, for the government. It has pledged its "support" to the fund without saying what that means. In theory, there is nothing wrong with using taxpayers' cash if commercial returns are on offer. But make a decision. Then there is the mentoring scheme for small business, which the banks say will be free for the users. That sounds like a cost to the banks. How much are they willing to spend if demand is great? Measure the success of the initiative by the level of commitment a year from now.