Banks 'still hesitant to provide SME loans'

13 July 2010

Britain's financial institutions are still turning down one-third of loan applications from small to medium-sized enterprises (SMEs), according to new research carried out by the Institute of Directors (IoD).

A new poll of nearly 900 entrepreneurs found that 39 per cent of those questioned had requested monetary assistance from banks between January and June, an increase of 14 per cent on 2009's figure.

"We're still concerned that access to finance for businesses remains difficult," said IoD director general Miles Templeman. "The best way to improve access to finance in the longer term is getting a lot more competition into the banking sector."

He added that some financial giants are requesting an increased amount of security before providing monetary assistance to SMEs and claimed the banking industry should be adjusted to place more power into the hands of smaller businesses.

Yesterday (July 12th 2010), Conservative MP John Redwood suggested old High Street banks should be re-established to boost competition and improve the availability of credit.

By Tony Aynsley

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