IoD survey finds a third of firms have been refused access to additional credit
A THIRD of businesses have been refused additional borrowing this year by their banks due to a tightening of lending criteria and increased demands for security, according to a report released today.
New findings by the Institute of Directors (IoD) show businesses are still struggling to access finance from their banks despite the continued injection of cash into the economy by the Bank of England.
The survey of 899 company directors found 39 per cent of member firms applied for finance with a bank in the first six months of the year; an increase on the 25 per cent application rate for the longer full year period of 2009.
But there are signs of increased liquidity and borrowing from the banks. Despite 33 per cent of IoD members being declined finance in the first six months of this year, it is a fall from the 57 per cent who had difficulty getting finance in 2009. The survey suggests banks appear to be requiring more security before approving requests for finance.
And 37 per cent noted an increase in the amount of security being requested against any lending, up from the 29 per cent in the previous survey.
IoD director-general Miles Templeman said: “The best way to improve access to finance in the longer-term is getting a lot more competition into the banking sector.”