UK banks slammed for failing to lend to small businesses

UK banks have come for criticism after figures revealed yesterday that lending to cash-strapped businesses collapsed by nearly £10 billion last year.

Bank of England statistics reveal the mockery of Project Merlin, which attempts to encourage banks to boost credit to companies.

The figures come as a survey by financial specialist Bibby Financial Services reveals the owners of small firms were falling back on personal savings to keep their businesses going.

According to a separate survey of more than 11,000 members of the Federation of Small Businesses, a third had used their own savings to fund their businesses.

The Bank of England figures reveal the shabby treatment meted out to businesses by five of Britain's biggest banks – Royal Bank of Scotland, Lloyds Banking Group, HSBC, Barclays and Santander.

 Business secretary Vince Cable said small firms were still finding it too difficult to secure the finance they needed.