It might come as no surprise to umbrella company contractors to learn that small businesses are losing faith in the UK’s banking system.
Research recently released by the British Banker’s Association shows that owners of small businesses are reluctant to visit their bank when they need finance. Figures show that 670,000 firms in the UK have needed a loan in the last 12 months but not apply for one. Furthermore 18% of business owners say they will only apply for funding in the next three months if the UK economy improves markedly.
The FPB claims the cost and hassle of preparing an application is a major deterrent and calls for moves to restore faith in UK banking institutions.
Alan Jackman, the senior policy adviser for the FPB, says this report clearly shows that small firms are experience a confidence crisis when it comes to the banking system in the UK. We need to see practical measures to restore people’s faith in the banks, but at the same time we also need to give alternative, innovative funders the opportunity to break the high street bank’s domination of the finance market.
Meanwhile, the FSB says it is the smallest businesses that suffer most from the lack of bank lending. John Walker, the Federation’s national chairman, said small firms are reluctant to approach the banks because they think they will be turned down, and even if they are granted a loan, it will be on terms that are not favourable.
He pointed out that the BBA’s survey clearly demonstrated that businesses with less than ten members of staff are most likely to be turned down when they first apply for a loan.
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