New research by Bibby Financial Services has revealed that Britain’s bank lending crisis shows no sign of abating.
According to a poll of 1,000 small business owners, 29% had funding applications rejected in the last 12 months, or else they failed to apply as they expected to be unsuccessful.
It appears to be a common concern, as the number of small businesses applying for external funding fell to 31% in the last year. Indeed, of the survey’s more successful respondents, 14% said the funding they secured was insufficient for them to fulfil their business plan.
The Bank of England reported similarly ominous figures earlier this summer, revealing that in the three months to May lending by UK banks and building societies fell by approximately £3bn. The Organisation for Economic Co-operation and Development plans to launch a report into the issue.
However, undefeated entrepreneurs have been instead turning to their inner circle to fund their business’ growth – with one in five securing a loan from friends and family.
Bibby’s product director, Andrew Dixon said: “Businesses reliance on the banks for finance has reached crisis point, as they are finding their ability to survive and grow severely restricted by a lack of funding.
“The government’s ‘Funding for Lending’ scheme will hopefully lead to an increase in bank lending to small businesses, but ultimately it fails to address the issue that small businesses have become too reliant on the banks.
“Small and medium-sized businesses need more and faster support from traditional and alternative lenders.”