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Access to commercial finance plummets

Nia Williams

October 12, 2009

Despite relatively high levels of optimism about future growth, an overwhelming 77% of respondents to the FPB’s latest quarterly Referendum survey reported seeing the terms and conditions of lending deteriorate in the last year, with many being forced to provide more security to cover their current lending levels.

Just 4% of FPB members said they had seen access to working capital improve in 2009, with 58% believing it had worsened. Of those surveyed, 65% said it was harder to access finance for growth and 68% said the cost of finance had increased.

When asked how the issue of finance could be improved, 36% of small business owners said they wanted to see a reduction in the cost of lending. Further, 27% said greater flexibility in negotiating and adapting terms and conditions to meet the changing needs of their business would be welcome.

Earlier research from the FPB shows that, at 6.5%, average interest rates for both loans and overdrafts remain well above the 0.5% Bank of England base rate.

It is believed the Government is probing the lending mechanisms of Lloyds TSB and RBS amid criticisms that both banks are pricing corporate loans at unrealistic levels.


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