SME Finance trickling through

SME finance "trickling through" despite Bank trends
New loan approval rates for businesses are down, according to the Bank of England's latest Trends in Lending report.

Overall, net monthly lending to businesses of all sizes in the UK stood at £7 billion in 2007, and £4 billion last year. This had fallen to £1.5 billion by March this year.

And among the smallest businesses - those with a turnover of less than £1 million - both approval rates and also numbers of loan applications themselves are down.

But the Bank of England notes that its own data - and also recent data taken from the department for Business and Regulatory Reform (BERR), used to inform the work of the Government's Small Business Finance Forum - may need to be interpreted with care.

A spokesman for the Federation of Small Businesses told More Than Business News that the feeling on the ground was starting to change, and the speed of recent events meant the official figures may not reflect the current situation.

She said that owners were becoming more familiar with the Government's Enterprise Finance Guarantee - launched in January - and that lending has recently picked up speed.

"We've certainly had some members saying that they just don't want to go to the bank because they know it is going to be such a hassle getting a loan," she said.

"They have heard from others in their community that they have gone through months of meetings to get a loan just to be refused.

"But now we are starting to see money from the Enterprise Finance Guarantee trickle through."

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