BBA says business loan rates have declined in Jan & Feb

The leading UK trade association for the financial services and banking sector recently stated that new figures show the number of business loans has declined over the course of January and February of 2011.

According to the British Bankers’ Association’s newest figures, fewer firms have sought out finance options such as business loans in the first two months of this year compared with the same period of time in 2010.  The BBA stated that while there are just shy of 4 million relationships currently in place between financial service providers and businesses involving products such as small business bank accounts, only around 510,000 of that figure is comprised of business lending relationships.

The outstanding value of all business lending was listed to be in excess of £42 billion by the BBA.  Overdraft borrowing was listed at £7.6 billion, added the trade association.

BBA statistics director, David Dooks, commented on the new figures, noting that the numbers may appear to be stable but are actually representative of a decline when contrasted with the figures recorded in the first two months of 2010.  However Mr Dooks added that in January and February combined, more than 100,00 small firms opened accounts with the most popular High Street business account providers even after December established that there had been a traditional reduction in such relationships at that point in time.

This announcement comes on the heels of one banking expert stating that organisations may find it becomes more difficult to secure finance from lending institutions in the coming months.

The Forum of Private Business’ Phil McCabe stated that firms could find it harder to get business loans in the immediate future. Industry experts agree that if the Bank of England’s Monetary Policy Committee approves a hike to the base rate this could make it more expensive for firms to make loan repayments.

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