June 29, 2011

Bank of England criticises MPs over bank lending to SMEs

by Jan Harris

The Bank of England has warned MPs that SMEs are still being unfairly treated by banks.

According to the Bank of England’s latest figures, lending to UK companies fell again last month, while new mortgage lending and consumer credit showed a slight improvement.

Lending to private non-financial companies fell by £4.9bn in May, with lending to manufacturing and construction companies showing the biggest decline.

According to the Bank of England’s Agents’ Report, SMEs are thinking twice about borrowing.

Although they need the investment, they are concerned that seeking additional funding could lead to an increase in the cost of existing borrowing, or a cut in their overdraft limit.

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