Economic Recovery stifled by failure to support Businesses

The economic recovery is being stifled by the banks failure to support and lend to UK businesses. Whilst the government is full of facts and figures about how more and more mortgages are being approved, they are neglecting to show that business lending has fallen again in the past few months with fewer businesses being able to get loans approved. George Osbourne has continued to push for more business growth but to do this businesses of all sizes need support of the banks, this support is not being given.You can view the information on the trends in lending from the Bank of England here. With more and more businesses being refused lending by the banks this has a big impact on the economy and growth. Many businesses are experiencing cashflow problems and bad debts this has a knock on effect to the way that they can afford to work or expand. Without the support of UK banks then businesses of all sizes are at risk.

“As the economy picks up, businesses are building up record cash reserves and paying off more of their debt, leading to an overall decline in net lending. However … new lending is picking up strongly,” said Richard Woolhouse, the BBA’s chief economist. “Low interest rates mean that the cost of finance is at an historic low, creating good borrowing conditions for businesses seeking to grow. What’s more, seven out of 10 applications for business finance are approved so there’s rarely been a better time to approach your bank.”

Although the spin from the banks looks to be positive the facts speak for themselves, interest rates are low but administration charges, usage fees on overdrafts and other hidden costs are putting businesses off applying for loans just as much as the banks not being as cooperative as they make out. Have you received a loan from a bank or arranged a business overdraft? Did it get approved? For many companies it doesn’t take much for them to run into trouble, a large VAT or Tax bill, unexpected bills, clients not paying at the same time, any of these are valid and frequent reasons for getting a loan or overdraft but without more support from the banks, more and more businesses are coming to us for advice on business recovery that was not necessary.