Banks Still Open To Lending To SMEs

Thursday, 29 January, 2009

Over a half of small businesses (52 per cent) have not noticed any change to their business loans and overdraft facilities, despite claims that banks have closed their doors on lending. A new survey from business finance consultancy Chaseblue Finance found that obtaining loans for small and medium enterprises (SMEs) from banks might not be as scarce as people think.

A fifth of respondents said when their banking facilities had been reviewed they had a price increase due to the banking underwriting and risk policies. But only 10 per cent had failed to renew their banking facilities as a result of trading performance or over-exposure of the bank to a particular sector.

Hywel Loveluck, director at Chaseblue Finance, said: "There is a widespread view that commercial banks have shut their doors to business from the SME sector. As major players in this market our experience is slightly different, as evidenced by this survey. "It is true to say that one or two banks are not open for new business but generally banks are very much open to new business cases, albeit with appraisal and underwriting process being more detailed and conservative."

The survey also found that nearly 40 per cent of businesses were already actively utilizing asset finance, and had been for the over the last five years for capital efficiency reasons as well as tax efficiency reasons. Colin Davies, asset finance director at Chaseblue, said: "In 60 per cent of cases this was to relieve pressure on working capital, 20 per cent of the respondents were doing tax reasons and 20 per cent to release funds tied up in existing assets."

Source: http://ftadviser.com/