Lifeline to small firms under bank lending shake-up: Easier to borrow for businesses as new rules are revealed Treasury to propose Barclays, HSBC, Lloyds and RBS share ratings This will make it easier for small banks to provide firms with cash Small businesses could find it easier to borrow money under a shake-up of bank lending rules unveiled today. At present, many firms find it difficult to persuade the big four banks to lend them cash to enable them to expand their operations â€" hampering the growth of the economy. Strict rules mean it is harder for smaller â€˜challengerâ€™ banks to be able to lend firms money because they do not have access to the credit worthiness ratings of potential borrowers. The Treasury will propose that the big four banks - Barclays, HSBC, Lloyds (pictured) and RBS - should be forced to share credit worthiness ratings with other smaller lenders The Treasury will today propose that the big four banks â€" Barclays, HSBC, Lloyds and RBS â€" should be forced to share these ratings with other lenders, making it easier for small banks to provide businesses with the cash they need. Sajid Javid, the financial secretary to the Treasury, said: â€˜The Government is determined to build a banking system that supports Britainâ€™s economy and its small and medium sized businesses. â€˜The best way to deliver this is to increase competition in the sector and remove the barriers to new sources of finance for SMEs [small and medium enterprises]. Requiring banks to share data is an important part of creating a more level playing field that will enable more providers to enter the market.â€™ The Mail launched its Make The Banks Lend campaign three years ago after it emerged they were starving small firms of funds, choking off the recovery. But last month Britainâ€™s two state-backed banks â€" Lloyds and RBS â€" were accused of ruining thousands of small firms by using â€˜unscrupulousâ€™ business practices. In a trap: At the moment, small business struggle to persuade the big four banks to lend them cash to enable them to expand their operations, which in turn hampers the economy An independent report commissioned by the Government found that RBS had acted like a â€˜hit squadâ€™ by deliberately causing healthy businesses to go bust for its own gain. In the worst cases, the bank withdrew lines of credit for previously solvent firms by charging high fees and charges so it could then seize their assets at knock-down prices. The new shake-up is an attempt to stamp down on such abuse. Ministers will today pledge to set up a consultation on new rules for sharing the credit data of small and medium enterprises. If these draft proposals are implemented, it will be easier for challenger banks and alternative finance providers to enter the market and provide credit to SMEs. Banks will be required to share small firmsâ€™ credit data through credit reference agencies. Several bodies, including the Office of Fair Trading and the Competition Commission, have all highlighted how a lack of information about the creditworthiness of small businesses has limited the number of providers of SME finance. As a result the big four high street banks control 85 per cent of SME lending. Improved access to this credit data, through greater competition and innovation in SME lending, should improve the cost and quality of services offered. Small firms are vital to the UK economy, accounting for over half of private sector employment and nearly half of all private sector turnover. The ability of SMEs to access finance is important for funding business investment, ensuring businesses reach their growth potential, and for facilitating new business start-ups. The consultation will invite views from stakeholders and the industry on the policy proposals and will run until February 17, 2014. The Government then intends to bring forward legislation in the next session of Parliament. The consultation follows an announcement in last yearâ€™s Budget that it would â€˜investigate options for improving access to SME credit data to make it easier for newer lenders to assess applications for loans to smaller businessesâ€™.