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Lending to Small Businesses Continues to Fall
Listed under: News
Published: Thursday, March 18, 2010
Retailers could face even tougher times over the next 12 months as banks and building societies continue denying them loans.
According to the latest Bank of England survey, lending to UK businesses fell by a whopping £6.5 billion in January, following a £3.4 billion decline the month before. The report, which reveals that financial aid for smaller enterprises experienced its sharpest decline in a decade in 2009, shows that lending contracted 9.3% year-on-year.
The Bank of England has warned that while the availability of funds is improving, most of it is going to larger businesses in the country, leaving smaller enterprises struggling for their survival.
Commenting on the shocking statistics, economist Howard Archer from financial analysis specialist IHS Global Insight, says, “Tight credit conditions remain a serious obstacle to significant, sustainable recovery and it is evident that weak bank lending to companies is being influenced by the low demand for credit, as well as the restricted supply of it."
A spokesperson from the Forum of Private Business agrees lending is at a low, adding, “Banks have to realise that the business landscape has changed and need to judge companies on their individual merits rather than taking a one size fits all approach.”
According to the latest Bank of England survey, lending to UK businesses fell by a whopping £6.5 billion in January, following a £3.4 billion decline the month before. The report, which reveals that financial aid for smaller enterprises experienced its sharpest decline in a decade in 2009, shows that lending contracted 9.3% year-on-year.
The Bank of England has warned that while the availability of funds is improving, most of it is going to larger businesses in the country, leaving smaller enterprises struggling for their survival.
Commenting on the shocking statistics, economist Howard Archer from financial analysis specialist IHS Global Insight, says, “Tight credit conditions remain a serious obstacle to significant, sustainable recovery and it is evident that weak bank lending to companies is being influenced by the low demand for credit, as well as the restricted supply of it."
A spokesperson from the Forum of Private Business agrees lending is at a low, adding, “Banks have to realise that the business landscape has changed and need to judge companies on their individual merits rather than taking a one size fits all approach.”
