FSB: Small business bank accounts need help to get finance

The Federation of Small Businesses have recently said that small business bank accounts need aid from the Independent Commission on Banking to gain better access to venture capital.

In a recent submission to the Commission, the FSB remarked that an increase in competition in the business loan sector would be the most efficient way to help in increasing the number of small businesses that are able to take out credit.  20 per cent of Federation members have approached financial service providers in the UK for loans over the past 12 months, according to the newest survey panel from the FSB, with one out of every three being turned down.

This one third of loan applicants translates roughly to 320,000 firms being denied much-needed funding over the past year, says the FSB.  This also flies in the face to the view of the banks and building societies in the UK who insist that demand for finance has been greatly reduced, the Federation said.

34 per cent of loan applicants wished to use the funds to cover cash flows, according to the survey.  However, 21 per cent of respondents wanted to use the credit to finance the purchase of equipment and machinery, while 17 per cent wanted to use the cash to facilitate business expansion.

Of the one third that were turned down for business loans, just over one quarter of them say it was due to the fact that they did not have sufficient available security.  Other respondents reported that their lender would not provide funds to pay creditors for stock or that they simply used their own cash instead of agreeing to the terms of the bank.

 

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