The Taxpayers' Bank coughs up...but is it enough?

When a big bank makes a song and dance about setting up a "£250m regional fund" to help East Midlands small businesses you can understand a few company directors spluttering over their cornflakes.
After all, aren't banks supposed to have all but abandoned businesses over the last few months while they lick wounds which are the result of their own outrageous recklessness?
Isn't the bank concerned – RBS group – the one which got in such a pickle that it's now effectively owned by the taxpayer anyway?
And isn't it the case that they are doing this simply because the Government has told them to?
I put these very same points last night in a phone call to Peter Ibbetson, the man in charge of business banking across the entire Royal Bank of Scotland group.
He gave me a refreshingly candid response.
"I don't think SMEs care where the money comes from. They just want to know it's available."
Fair point.
But this is a complicated issue, and the reasons why it's complicated go some way towards explaining why there can be no quick fix for the shortage of business finance - and the economic problems it's causing.
First of all, the additional £250m which RBS and NatWest are making available to smaller businesses in the East Midlands this year is the direct result of a Government decision to change the nature of the taxpayers' shareholding in the group.
That freed up a load of money in the bank and you can bet that the conversations Mr Ibbetson admitted he'd been having with Government's business department will have contained heavy hints about what it might do with this tidy sum.
So although Mr Ibbetson insists that the decision to set up the fund was a "purely commercial" one, his admission that the bank has "the same agenda as the Government" is ripe for wry interpretation.
Either way, no change in shareholding would have meant no money.
Put the political froth to one side, though. The real issue here is whether the bank will be able to easily hand the money over.
In a growing economy, there is a big appetite among businesses for borrowing money from banks to invest in expansion. Provided the expansion is sensible, the bank will lend the money because the company will get enough new business out of a growing economy to pay it back.
It all changes when the economy is in recession, though.
In an environment where the economy is shrinking rather than expanding businesses see little point investing in expansion. What they need is a bank that's willing to help them through short-term cash flow difficulties by increasing their overdraft, for example.
So actually finding £250m worth of expansion plans that are worth investing in is not as straightforward as it sounds.
It can be even more difficult in the SME market as smaller businesses tend to be less well-versed in providing the kind of financial evidence banks need to be sure they are putting money into something sustainable.
Over the past few months there have been plenty of apocryphal tales of banks doing the dirty on unsuspecting companies.
There have also been stories about banks with money to lend being confronted by companies waving ancient business plans written during a boom economy.
The £250m of additional money that RBS is making available will help. But as Mr Ibbetson made plain, the normal rules of sound business will apply.
This isn't money for nothing.
No bank will lend money for nothing, and nor should it. As the overdraft issue illustrates, the question is whether there is enough money available for them to invest not in new ideas, but in preventing existing businesses falling over.
This is where an altogether bigger bank comes in – the Bank of England. Never mind the interest rates, which at one per cent are getting close to as low as they can go. Watch instead for another tactic that the Bank may employ.
This is increasing the money supply, the point when the Bank goes beyond lending its existing stock of cash and simply prints more of it.
The theory there is that with more money available banks will find it easier to indulge businesses struggling with cash flow problems. This would help tackle the vicious economic downward spiral caused by rising unemployment.
Amid increasing signs that it is the availability of money, not the price of it, that is the problem, that moment may not be far away.