Barclay’s refusal to accept targets for lending to small business has not gone well with the Scottish head of Federation of Small Businesses.

Government has set targets for banks which it owns a stake in regarding lending to small businesses. And it soon plans to extend this target to all banks as they have seen satisfactory results.

Lloyds Banking Group and Royal Bank of Scotland have been consistently meeting the target set by the government.

Governor of the bank of England had earlier described limited lending to small businesses as the main reason for Britain’s slow economic recovery.

Colin Borland, the FSB’s public affairs manager for Scotland has said that targets have no meaning if no-one adheres to them and felt that there should be penalties for institutions failing to support the economy. He also believes that the Westminster government’s main priority has to be to develop real competition in small business banking.

But Steve Cooper, head of Barclays small business division is completely unfazed by these comments and has clearly said that Barclays’ have no intentions of signing up to a target. He fells this would just make the small businesses that they refused to lend before to feel they have a better chance.

He told the Financial times that this could result in banks agreeing loans to meet targets rather than on merits of application which the Barclays’ are against.

Mr Cooper has also defended Barclays’ interest rates for Small businesses. A Barclays’ spokesperson has clarified that these targets do not mean much to their organisation as they are already exceeding it and that if they found a business viable, they would surely lend. He showed that they have lent nearly 30% of new lending to small businesses.