BANKS’ continuing reluctance to lend to small businesses in London is damaging the capital’s reputation as a place to do business, says a report by law firm Mishcon de Reya and the London Chamber of Commerce and Industry.
Of 170 small business owners in London who were interviewed 62 per cent said that they have chosen to self-finance or use savings to grow and develop their businesses recently, rather than taking on debt, with only 26 per cent turning to the bank for financing.
Thirty-five per cent of business owners rated growth and investment opportunities in London as “poor” and only 20 per cent described the opportunities as “good”.
The report, which was carried out by ComRes, showed that 30 per cent of businesses have no plans to invest in growth for the next two to five years, although 40 per cent said this had nothing to do with the recession.
Speaking at the report’s launch, Luke Johnson, chairman of Risk Capital Partners, said that the government should “address the issue of bank lending by making it easier for the creation of new commercial banks”.
The head of the British Bankers’ Association, Angela Knight, pointed out that just three weeks ago the banks set up a £1.5bn fund to invest in small businesses, adding that “90 per cent of applications for credit are now granted.”