"Financing projects from £50,000 to £100 million"

Banks deny SME claims of limited access to finance

Banks deny SME claims of limited access to finance

Britain's small manufacturers are at odds with banks over the reasons behind the stifled flow of credit.

Manufacturers have blamed a fall in orders and output in the last quarter on the unwillingness of banks to lend.

The latest SME Trends survey from the Confederation of British Industry (CBI) shows that 37% of firms have reported a fall in their total orders in the last quarter, compared to 23% whose orders had increased.

The survey revealed ongoing concerns from small businesses that a lack of access to finance has stifled their spending plans.

This is despite the Funding for Lending Scheme, which has seen the government offer cheap funds to banks that are lending outwards to homes and businesses.

"It's been another disappointing quarter for small and medium-sized manufacturing firms, who have seen new orders and output continue to fall," said Stephen Gifford, Director of Economics at CBI.

But these claims are at odds with those of Royal Bank of Scotland boss, Stephen Hester, who says that the bank is "desperate" to lend around £20 billion but is struggling to find takers because of low confidence in the economy.

Hester told the Sunday Times that the part-taxpayer-owned bank has "deposits coming out of our ears," while asserting that "we are lending as much as we can."

His claims may add to firms’ cautious level of optimism that demand will improve in the year ahead.

The Trends survey showed that optimism about the overall business environment has stabilised following three consecutive quarters of decline.

Over a fifth of polled manufacturers (21%) expect export orders to grow in the next three months, while almost the same percentage (17%) plan to spend more on product innovation.

"Firms do expect to raise output a little in the coming three months," Gifford said.

"The recent weakening in Sterling will have boosted the competitiveness of the UK’s smaller manufacturing firms, with a strong pick-up in export orders predicted.

"But conditions will remain challenging for the sector. Fears about the impact of political and economic conditions abroad on export demand have risen and there is little sign in this survey that credit conditions are improving."

Tuesday, 07 May 2013 14:34
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