Business secretary Vince Cable has unveiled plans to encourage banks to increase their lending to small firms, allowing them to invest in their businesses.

The Financing a Private Sector Recovery consultation, launched last week, suggests penalties could be applied to banks which fail to boost lending. Also suggested are an increase in government loan guarantees and the introduction of regional stock exchanges.

The ACS said it welcomed Cable's ambitions to increase lending to small enterprises. "Credit in all its forms is vital to business across our sector, and the past couple of years have been a struggle for some," chief executive James Lowman said.

A survey by Forum of Private Business last month showed that access to finance was worsening. Just 1% of respondents said access to finance had improved, compared with 3% in May, and 15% said it has worsened.

"Contrary to what some banks are saying, some firms are still not able to access the finance they need," the Forum's head of policy Matt Goodman said. "The green paper is timely in addressing lending as part of a move for a private sector-led recovery."

Topics