As pressure grows for the banks to meet targets for lending to small businesses, the REC has stressed the importance of such funding for recruitment agencies.
The top five UK banks missed their first-quarter target for lending to SMEs by £2 billion so Business Secretary Vince Cable has warned that further action could be taken by Government if this record does not improve. The current target was set as part of the ‘Project Merlin’ deal between ministers and the banks.
Commenting, Neil Smith, the REC’s Chair, said:
“Recruitment agencies often have to pay workers before they receive payment from the end clients; loans from banks are the only realistic way to plug this gap and keep the agency going in the interim. A steady stream of bank funding over the next few years will therefore be vital if the recruitment industry is to continue its recovery from the recession and particularly if new agencies are to get a foothold in the market.
“Large parts of the UK economy rely on the flexibility that agency workers provide, including in some cases the banks themselves. If the economy as a whole is going to create more jobs, then there must be sufficient support for the employment agencies who ‘oil the wheels’ of other businesses.
“As banks do more to support SMEs as part of their deal with the Government, it is important that the recruitment sector is included in this if all parts of the economy are going to benefit from a flexible, accessible workforce.”