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

Business owners still lack confidence in mainstream banks

Business owners still lack confidence in mainstream banks

Small business owners are still reluctant to apply for funding from mainstream banks, according to a new study.

The latest Owner Managed Business Barometer from the Bank of Cyprus UK suggests that small business owners would still prefer to invest their own cash rather than apply for funding from mainstream banks.

It emphasises the lack of confidence that remains amongst business owners about the chances of a successful application. Only one in four respondents to the bank’s survey expressed any confidence in being granted a commercial loan from their bank.

And despite the recent upturn for the economy, only one in eight respondents to the bank’s survey (12%) said that they planned to apply for credit from banks.

Over a third (34%) – almost three times the number – said that they were likely to invest, but using their own source of funds instead.

But many are keen to avoid taking on further debts while they secure their recovery. 58% of owner managed businesses are not planning to seek additional funds over the rest of the year.

The news follows a tense stand-off between the Bank of England and major institutions Barclays and Nationwide, which have both threatened to cut commercial lending to meet new capital ratio regulations (read more).

And it is disappointing that owner-managers have little confidence in their banks, noted Tony Leahy at the Bank of Cyprus UK.

"Whilst businesses are right to keep a tight grip on their credit management and cash flow until recovery is more evident, it is disappointing that many respondents lack confidence that their bank would support them with additional facilities if needed," he said.

"To support recovery, it is vital that OMBs and their banks are engaged in dialogue, to avoid any shocks, but also to remove any doubt or uncertainty that may inhibit confidence in planning for the future."

Friday, 13 September 2013 14:02
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