Yesterday saw the release of the latest Bank of England Agents Summary of Business Conditions report.
Unfortunately, the picture remains bleak.
“This latest report from the Bank of England confirms once and for all what any company director knows: that (small businesses) just aren’t getting credit and, worse still, are having their overdraft facilities cut or pulled. In the rare cases where credit is available, it is getting more expensive.”
That’s exactly what we’re hearing, too. This week, in fact, we were contacted by a potential borrower who had begun searching for a business loan after his bank, of some years, had withdrawn his overdraft facility.
The Bank of England’s report tells a mixed tale. Whilst large firms, with strong balance sheets, found that “credit was normally available on reasonable terms”; some independent businesses “continued to report that they were unable to obtain credit at any cost.”
Considering the number of promising owner managed businesses, well positioned for growth, that’s a sorry state for business investment in the UK. As I wrote on this blog last week, there are plenty of sound candidates for small business loans out there; firms that boast impressive turnover and growth of at least 33 per cent in the last three years, but they are currently being let down by the financial sector in general. To not let these small businesses obtain credit at any cost is to stifle the innovation and growth that Britain needs so badly.
When refused credit from the bank, some small businesses go in search of an online loan whilst others scale back their activities or attempt to finance growth from within. According to Christopher Shaw, that’s not good news for the broader economy:
“That more companies are starting to finance their growth internally is not necessarily what the Chancellor wants to hear either, as organic growth is slower growth and the economy needs growth now.”
Support for private business investment and peer to peer lending is essential to help plug this funding gap; banks have done what they can, but more is required – urgently. That’s why FundingKnight is committed to sharing the message about how peer to peer lending works, and why we’ll campaign for swift regulation of people to business lending too.
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