More small firms complain their loan applications are rejected

Tim Wallace
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INCREASING numbers of small businesses are complaining to the ombudsman that their loan and overdraft applications are being turned down by banks, according to a study by commercial finance group LDF.

A total of 816 small firms complained to the Financial Ombudsman Service (FOS) in 2013, up by one-third on the 612 in 2012.

And LDF believes more firms are having trouble with bank finance, as only the very smallest firms who are able to use the FOS system.

“Unfortunately, the banks are caught between a rock and a hard place,” said LDF’s Peter Alderson.

“One the one hand they are limited by requirements to shrink their balance sheets and pressure to take a more cautious approach to lending, while on the other they are being expected to increase lending to SMEs.”