Quantitative Easing has not resulted in banks passing money on to businesses, with the Basel III requirement for banks to increase their buffers encouraging them to limit lending and raise rates. The Government has already recognised the potential of peer to peer lending to fill this gap, with bidding beginning tomorrow for the £100 million earmarked for non-traditional lending through so called ‘private banks’ in the last Budget, but this figure needs to be drastically increased to have a real impact on SMEs.
Stuart Law, Chief Executive of Assetz Capital, said:
"Many traditional banks are now a spent force, acting like zombies whilst slowly recapitalising following previous losses. This has led to a reduction in loans outstanding to SMEs and is holding back growth in the UK, something that HM Treasury is acutely aware of.
"The IMF recommended last week that the Bank of England cut rates even further, print more money and ease regulatory pressure on the banks, but we have already witnessed the failure of Quantitative Easing to significantly trigger growth.
"The Government is right to continue with its austerity programme and to allow the private sector to lead the recovery, but SMEs need more funding, as lending fell from £55bn down to £44bn over three years in the credit crisis. Channelling money into business sectors that produce a big return – for example construction – and bypassing the banks could create a turning point in the existing economic stalemate and help kick-start economic growth."
Assetz Capital is an investor group that acts as loan originator and agency for private investors making syndicated loans to businesses and property developers. It sources two types of lending opportunities for private lenders: SME company loans and property development loans, for the development and refurbishment of property in the UK.
Assetz Capital has investors wishing to lend an initial £10 million on SME loans and property development schemes channelled into a number of projects, including a Care Home in Southport (value £1.2m), two residential development projects in prime Central London (value £600,000 and £1million) and a number of SME business loans ranging in value from £200,000 to £500,000.
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