Banks are lending to SMEs but young firms still miss out

Julian Harris
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MOST small and medium sized businesses looking to borrow from banks “got what they wanted straight away”, according to a new survey published yesterday.

The majority of requests for overdrafts (72 per cent) and for loans (59 per cent) were granted, the research from BDRC Continental revealed.

Yet the youngest and smallest firms were less likely to be granted funds, the survey showed, drawing renewed criticism from business groups.

“The smallest SMEs are losing out, with a third being refused outright when initially applying for new finance,” said John Walker of the Federation for Small Businesses. “This figure is more than double the bigger SMEs being refused.”

For companies that have existed for 10 or more years, 70 per cent were offered the loans they sought; yet for younger firms, only 44 per cent were granted the desired loan.

Firms with a worse than average external risk rating were far more likely to be turned down by lenders.

Only half (51 per cent) of SMEs are using external finance. Fifteen per cent said they had wanted to apply for funding in the last 12 months but had not done so.