Commercial Finance Specialists

Tens of thousands of small companies that are attempting to grow are being turned down for a first overdraft or business loan, research has found.

The quarterly Business Monitor found that banks were considerably more likely to reject loan and overdraft applications now than in 2007, despite pledges by state-aided high street banks to help those seeking credit. Furthermore, the vast majority of rejected applications were not offered any alternative.

In the region of 70,000 small firms were not able to secure not the finance they required and 54,000 were rejected for loans. Unsurprisingly, new business ventures with limited trading or credit history found it considerably harder to attain credit, while those renewing current overdraft or loan facilities were generally more successful.

Numerous sources suggest that a high number of small/medium enterprises, perhaps 150,000 were deterred from applying for credit, either due to the current economic climate or because of the banks' outright reluctance to lend.

The British Bankers' Association has been happy to take the lower application number as a sign that SMEs were content in their financial independence. BBA chief executive, Angela Knight, commented:

"Most SMEs are able to get the credit they need from their bank, but over the past twelve months, the majority of SMEs have been happy to operate without seeking external finance".

However, she does claim that there is a need to "dispel the myth that banks automatically turn down credit applications".

There remains some concern about this stigma, and that conditions for lending remained severe, as SMEs often require credit to help with fluctuating cashflow.

Commercial Finance Group can help you by sourcing funding arrangements for your property finance, asset finance, and commercial finance needs. Why not contact us and speak to one of our specialists today?