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Small business bank loan deal hits stumbling block

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Efforts by the Government to come to an agreement with the major banks on lending to small firms have reached a temporary impasse.

Under the agreement, some £200 billion in small business lending was to have been slated for 2011.

But problems have arisen over governance issues.

The banks have been arguing that lending targets for weaker firms might be in conflict with rules that ensure any lending decision must be in the best interests of shareholders.

Negotiations on the deal have been ongoing for several weeks, and a final decision had been expected soon.

It now seems that further discussions will be necessary before the banks and the Government can make an announcement on plans to help finances smaller enterprises and companies.