Many businesses turned down for loans by banks
March 17, 2010
It has been revealed in a recent report that many businesses in the UK that have needed financial aid from their banks have been getting turned down, as banks continue to clamp down on their lending.
The figures show that last year nearly 60 percent of businesses in the UK were refused credit from their lenders, even though the government has been taking action and putting into place measures to try and boost lending to businesses from UK banks.
The figures were compiled by the Institute of Directors, which carried out a survey into lending to businesses by banks last year. Banks have claimed that they have been lending to businesses that need finance, but the report seems to contradict these claims. The data indicated that around 57 percent of businesses were turned down for finance by banks, and a further 20 percent had to use credit cards to finance their business.
The data also showed that 20 percent of businesses had not even bothered applying for finance last year from banks because they thought that they would be turned down for the credit that they needed, and some thought that the cost of the finance would be too expensive for them to afford.
Many were also not informed about various government schemes in place such as the Enterprise Finance Scheme, which provides government guarantees on loans between £1000 and £1 million.
An official from the IOD said: “The fact that over half of all businesses seeking finance last year were turned away by their banks is totally incompatible with the banking sector’s position on the state of lending in the UK.”
He added: “Any contraction in credit card finance could see significant price hikes, adding to the already grave difficulties that many businesses are having accessing funds.”
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