HSBC hits Project Merlin target for lending to SMEs

HSBC has confirmed that it met its target for Project Merlin in 2011, and vowed to continue to lend even more to small and medium-sized enterprises throughout 2012.

Project Merlin was designed to commit banks to lend more to small businesses. The five banks that signed up to the project – HSBC, Barclays, RBS, Lloyds and Santander – reported that they loaned £157.6 billion collectively the UK businesses by the end of the third quarter of 2011, which set them proportionately ahead of their target of £190 billion for the year.

The amount lent to SMEs, however, was slightly behind target at that point, at £56 billion.

HSBC reports on its own contribution that it exceeded the full year target to provide £38.8 billion of lending facilities to UK business customers and supplied gross new lending facilities of more than £11.7 billion to SMEs.

Small business leaders have disputed the effectiveness of the scheme, saying that loans were becoming more difficult to source and more expensive to service.

Andrew Cave, of the Federation of Small Businesses, argued that financial conditions for small businesses had deteriorated since the initiation of Project Merlin.

Speaking about its targets for 2012, HSBC declared that it hoped to approve 80% of applications from small businesses and find ways to increase its lending.

"In 2012 we will further increase our support for SMEs looking to grow and internationalise, across all sectors and all regions," said Jacques-Emmanuel Blanchet, the Head of Commercial Banking at HSBC.

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Kate Guthrie