Claims by the large banks that the only reason they are not lending more to small and medium-sized businesses is that there is limited demand for credit are not accurate, according to one lender active in the sector.
New bank Aldermore said that demand for its loans continued to rise sharply, undermining the case of its larger rivals. Its lending grew by 14 per cent during the first three months of the year. Phillip Monks, Aldermore's chief executive, said that his bank's lending record suggested small businesses were struggling to get traditional sources of credit. "Small businesses are keen to look at alternative sources of funding to the big banks," he said.
Aldermore's claims come as the Bank of England prepares to publish figures showing what progress the largest banks have made on lending since the Project Merlin accord earlier this year. Under that agreement, the biggest banks agreed new lending targets, amid concern that the lack of credit in the economy is inhibiting the recovery.
The Project Merlin figures will reignite the debate over the extent to which the banks are doing their part to help the recovery. Last week, the Business Secretary Vince Cable warned it was not too late to introduce new taxes for the industry. But Mr Monks said he did not expect the big banks "to end this drought of funding for SMEs for quite some time".