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One Third Of Small UK Firms Rejected For Loans

by Jim ONeil on July 18, 2011

in uk loans news

BDRC Continental, the largest independent research agency in the UK, recently found that one-third of UK firms with fewer than ten employees have their loan applications rejected.

In a recent survey conducted by BDRC, over half of these businesses reported that they did not apply for a loan within the past year. The reason? They anticipated another rejection.

British firms with sales up to 25 million pounds were the focus of the survey. BDRC conducted 5,000 interviews between the months of March and May. In April, for the 22nd month, lending to non-financial businesses in the UK contracted, according to the British Bankers Association.

For first quarter 2011, Bank of England figures revealed that the five largest banks fell short of lending targets.

In February, HSBC Holdings Plc, Lloyds Banking Group Plc, and other banks agreed to offer 76 billion pounds of additional credit to assist with the economic recovery.

If this deal is not kept, these institutions may face additional taxes, stated Prime Minister David Cameron. The money might be there but companies are not applying for loans because they were previously rejected of feel discouraged by lending banks.

Federation of Small Businesses National Chairman John Walker reported that the smallest companies are feeling the biggest pinch from contracted bank lending.

Many businesses are worried about the time and cost involved in borrowing. The British Bankers Association continues to encourage lending, saying that banks are dedicated to providing businesses with credit obtained through simplified channels.

Businesses in trouble will need to overcome their fears in order to take advantage of this additional credit before it is too late. If they are able to find cheap loans featuring a convenient application process, they should proceed with borrowing.

Once several businesses dip their toes into the water, others are sure to follow.

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