Killing the Goose?

There is an old story about killing the "Goose that laid the Golden Egg". The particular goose that concerns us is small business. Back in the UK we learned that RBS (Royal Bank of Scotland), now a partly government-owned bank, has been criticized for reducing its lending to small businesses, despite promises given to the government when it was partly taken over.

This apparent lack of interest in small business has forced many companies to explore other options. John Wright, national chairman of the (UK) Federation of Small Businesses, said: "Figures from the British Bankers Association indicate that more firms are dipping into their savings, which shows that many small businesses might be put off from going through a torturous application procedure for a loan or overdraft extension, which ultimately might not be successful."

This situation cannot last forever. Capital is the lifeblood of small business, and just as in the US, small business is the lifeblood of the economy. In fact, doesn't this story sound familiar? Americans have heard similar stories, and the result will be the same. With all the banks that have been given subsidies or even taken over, some safeguards must be put in place (in both countries!) to assure a fair share of capital is made available to small business on an equitable basis.