Still too many obstacles for businesses seeking finance

5th September 2012

Commenting on the release of the independent SME Finance Monitor, Dr Adam Marshall, Director of Policy at the British Chambers of Commerce (BCC), said:  -The latest statistics from the SME Finance Monitor demonstrate that there are still serious obstacles for many companies seeking external finance.

The figures strengthen the case for the creation of a British Business Bank, which would help address some of the problems in business lending.  -It is striking that the number of successful applications has fallen. Many companies still say they feel discouraged from applying or are put off by the process. Despite claims that financial institutions are open for business, only a minority of first-time applicants are being approved for loans and overdrafts by their banks.  -While it is good to see that most existing bank customers get the facilities they need when they ask for them, lenders' low risk appetite means that too many young and fast-growing companies aren't getting access to the capital they require. With companies less confident of a successful application for finance in the future, there is more to be done to restore relationships, improve transparency and rebuild trust between businesses and banks.  -A British Business Bank is needed to fill the gap left by deleveraging commercial lenders. Over the long-term, a business bank would help to address the real phenomenon of discouraged demand, and offer support to the dynamic, new companies that could be the growth engine of the UK. However, nothing less than a fully-fledged business bank will do. Business is not interested in a hasty or half-baked effort. Any proposal for a business bank must have scale, the right infrastructure and a long-term outlook.