July 11, 2011

SMEs cautious over bank funding

by Jan Harris

Small businesses who applied for bank funding over the last 12 months were likely to have been successful, according to new research.

Market research firm BDRC Continental found that 72% of SMEs who applied for an overdraft were successful and 59% successfully secured a loan.

However, only 15% of the businesses surveyed applied for new funding or renewed existing facilities during the year, indicating that SMEs lack confidence in applying for finance.

The reasons given by SMES for not seeking bank funding included the difficult economic climate, being discouraged by banks at an early stage of enquiry, the cost of borrowing and the principle of borrowing.

The research, which was commissioned by Britain’s six biggest banks, was based on more than 5,000 telephone interviews.

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