A recent study by the Federation of Small Businesses (FSB) reports that lending to smaller firms has hit an all-time low, blaming banks for ‘’pulling up the drawbridge’’ to smaller companies.
Delving deeper into the studies’ findings, successful finance applications reached a record low for the first quarter of 2022 with just two fifths of the 9% of small firms who applied, getting approval. Quite interestingly, through the same period, lending to larger companies increased – according to the Bank of England.
Lucie Grech, owner of Manchester based beauty clinic, The Laser Lounge, shared with the BBC how she had applied to five banks for a business loan (between £5,000 and £50,000) since setting up in October 2019, but only just succeeded in securing any money. She described the process overall as a ‘’nightmare’’.
‘’This was mainly because I was a sole trader and no loan companies or banks would entertain me, even though my business is highly profitable despite the pandemic.’’
Lucie is sadly not alone in her experience.
Mr McTague, chairman of FSB, suggests a culture change is needed, with lenders taking a more objective approach to finance for small businesses.
“It is, in our opinion, always best to consider using a qualified and regulated company finance broker to raise funds for your business. They will listen to your requirements and carefully select the most appropriate funders or lenders to approach who best suit your company’s needs.’’
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