ISME want SME lending rates to reflect ECB rate
Small business lobby group ISME has called on financial institutions to reduce their lending and overdraft rates to SME's in line with domestic mortgage rate cuts.
The organisation said that interest rate charges on lending facilities to small businesses were typically four to five percentage points higher than existing mortgage rates.
ISME also claimed that interest rate policy is supportive of investing in bricks and mortar rather than wealth creation, job maintenance and employment generation.
Isme Chief Executive, Mark Fielding called on the Government to put the same pressure on the banks to cut lending rates to small businesses as they did to cut domestic mortgage interest rates.
On average, small businesses are charged between 8-10% for their lending facilities. In the last three years alone interest rates were reduced by 2.75% but the cost of business borrowing remains high.
Mr Fielding said: "A vibrant small business community plays a significant role in the regeneration of the economy in a period of slow or no growth. A benign interest rate regime is a prerequisite for any entrepreneurial activity.
"In the current environment it is essential that small businesses, in order to compete, must reduce their level of costs as much as is possible.
"The rate of interest charged to them is outside their control. It is imperative therefore that any reduction must be passed on to the companies concerned."
