Less than one in 10 get a small business loan, survey says

Just when you thought it was safe to go back into your high street branch: a new survey says that less than one in 10 SMEs looking for finance at their bank or building society actually walk out with a business loan.

There’s a massive shortfall when it comes to how much working capital is being made available to small business bank account owners, as evidenced by the new research study from Bibby Financial Services, despite the insistence of banks stating that 80 per cent of their received lending applications are approved. ¬†Either the financial services sector can’t handle basic maths, or someone’s not telling the truth – and it’s a safe bet that the 1,000 business banking customers interviewed by Bibby aren’t all lying.

The Government has done little to actually encourage banks to get off their bums and begin lending once more, even though it has tried. The recent Project Merlin scheme was more or less a miserable failure, with nearly every high street lender missing its target when it came to lending to SMEs.

Banks say that it’s not their fault and that small business owners simply aren’t coming in to ask for loans, effectively throwing their hands up in the air and saying ‘well, you can’t blame us, can you?’ Of course, this new survey gives the financial sector the lie by revealing how few SMEs actually secure credit from banks and building societies.

Regional agents from the Bank of England say that the willingness of a given bank to lend is controlled directly by a range of variable, the least of which being the sector in which the business operates. The property sector is more or less a leper when it comes to bank lending at the moment, agents added.

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