Business loans down by £50 billion over past year says BoE

The Bank of England recently released new data that suggests small business bank account holders are hardest pressed in their search for new lending opportunities.

BoE governor Mervyn King also stated in a recent comment that the recovery of lending conditions in the UK are progressing at a frustratingly slow rate; across all industry sectors the rate of business loan approvals dropped yet again this past June, the second quarter of the fiscal year finds the lending rates  £8.6 billion lower than they were in 2009.

Liberal Democrat spokesman for the Treasury, Matthew Oakeshott, struck an accusatory tone in comments made recently, saying that banks are making it harder for businesses to claw their way out of the global economic crisis, effectively siphoning £50 billion from UK businesses’ chequebooks last year.

Oakeshott was highly critical of the excuses high street banks have been giving in regards to the lending freeze, stating that if it was true that these larger businesses are repaying their loans, then he does not understand why there is not more capital available for smaller businesses who are in desperate need of the cash.

It has now been eight consecutive quarters that small business lending has declined according to the BoE’s figures, bottoming out to 3.6 per cent annually for 2nd quarter of 2010.  Additionally, regional agents for the Bank of England also reported that larger corporations came out with more benefits from a small positive credit condition adjustment at the beginning of 2010 than their smaller counterparts have.

Oakeshott concluded by stating that the new data released by the BoE drew attention to a dangerous schism in business lending between larger businesses that have more resiliency due to their size and business entities that lack that same massive scale, which leaves them with less options if banks decline to provide them the necessary funds to manage and grow their businesses.

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