Lack of loans for SMEs threatens to slow economic growth in UK.

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An unwillingness among British banks to lend to smaller firms could be jeopardising GDP growth, while the companies affected are resorting increasingly to alternative funding sources, a new study has found.

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The latest quarterly "Finance monitor for SME lending" report from independent research firm BDRC Continental has revealed the most positive business sentiment since the first one was published in 2011, with 51 per cent of SMEs looking to expand over the next year. But the report also suggests that the banking industry could be putting a brake on economic growth rather than providing the conditions to enable it.

BDRC Continental's study has uncovered a 5 per cent increase in the number of SMEs obtaining funding via alternative sources since the previous report, which covered the first quarter of 2013. In addition, the proportion of smaller companies resorting to leasing and hire purchase has increased from 6 per cent the previous quarter to 9 per cent--the highest figure since early 2011.

Only a third of the SMEs surveyed said they were...

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