Lending to small to medium-sized businesses (SMEs) has fallen again to its lowest level since 2006, the latest Item Club report has revealed. The UK’s high street banks lent £44.2 billion to businesses during quarter one of 2012. On this trend, lending for the whole of the year will have slipped by 4.6% down to £429 billion, a fourth consecutive annual fall. Approximately 38% of all loan applications are now being rejected as businesses struggle to see the impact of various funding initiatives bought in by the government to counteract a reluctance to lend by the major banks. Lending levels are unlikely to recover to pre-recession figures before 2016, the report also suggested. Senior economic adviser for Ernst & Young’s Item Club, Carl Astorri, felt that the new Business Bank launched by the government will prove insufficient: “Government schemes to increase lending may help a lucky few but, as banks are encouraged by regulators to store up more capital and to look again at their forbearance policies and so-called bad-loan books, most small businesses are going to continue to feel the squeeze”.
Alternative funding solutions for SMEs
Has your SME or small business struggled to access much-needed external capital? Are you unsure where else to turn to raise finance? Invoice finance solutions such as invoice factoring and invoice discounting work to release the cash you may have tied up in unpaid invoices. Many businesses have to wait up to 120 days to get payment for their invoices in the current climate, as late payment culture has become particularly ingrained. But using invoice finance, you can release that money quickly and simply, helping to fund your business with the cash you deserve. Why not browse our website, or give us a call on 0845 602 9354, to find out more about how invoice finance could help fund your business.