THE smallest businesses are still more likely to get a rough deal at the hands of the banks, the Federation of Small Businesses (FSB) warns today in response to figures released by the British Bankers Association (BBA) Taskforce’s independent survey.
An independent survey conducted by the BBA Taskforce – made up of the major banks, business organisations and trade bodies – shows that businesses with up to nine members of staff are most likely to be initially refused finance.
Amir Butt, Peterborough branch vice chairman, Federation of Small Businesses, said: “Small firms have been telling us for the past few years that they are fearful of approaching the banks for new finance, or to extend an overdraft, because they know they are likely to be turned down, or be offered a deal on terms that just aren’t favourable for them. The picture that emerges from this independent research shows that the smallest SMEs are losing out – with a third being refused outright when initially applying for new finance.”
He continued, “The FSB’s own survey work has shown that small firms are missing out on growth and investment opportunities and are at a competitive disadvantage as a result of failing to secure the finance they have requested. This will have a much wider impact on the economy as small firms make up more than half of UK GDP.”
The figures show that more than half (55%) of businesses with up to nine employees had not applied for a loan in the last 12 months because they expected to be turned down.
Overall, 52 per cent of small firms (with up to 249 employees) said that applying for a loan caused too much hassle, was too costly, or that they were being asked for too much security.
The figures, which have been commissioned by the Taskforce, give an important insight into lending to SMEs, and do indicate that many requests for finance are being agreed. However, it is clear that the very smallest of firms are the least confident and the least likely to get support from the banking sector.