Greater competition needed for Scottish SME finance

Scotland needs new sources of credit to help small and medium-sized businesses (SMEs) access finance, the Scottish Parliament's economy, energy and tourism committee has said.

Following an inquiry into business lending, the committee concluded that Scotland needs more choice and a different range of financial products.

In 2012, the Royal Bank of Scotland and the Bank of Scotland accounted for 70 per cent of all business lending in Scotland.

Murdo Fraser, convener of the economy, energy and tourism committee, said:

"The problems of bank lending following the recession are well rehearsed. Whilst the picture has improved slightly, it remains one of the biggest issues facing small businesses.

"Whilst the two biggest lenders in the market have said that they are open for business, we need greater competition and not more of the same to unlock the potential of thousands of Scottish businesses."

Colin Borland, head of external affairs in Scotland at the Federation of Small Businesses gave evidence to the committee. He said:

"We need more institutions competing for Scottish small businesses' custom and we need to make it easier for small enterprise to access bank and non-bank finance.

"As the economic recovery gathers steam, it is critically important that Scottish firms can access both investment finance and working capital. Without this support, small enterprise won't be able to drive the growth and create the jobs the country needs."

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