Small businesses think bank-lending terms excessive

Small businesses believe that bank-lending terms are excessive, according to research conducted by finance provider Syscap.
Of the businesses reviewed at least 90% believe that loan arrangement fees are excessive, whilst 75% feel that the lending margins on loans are too high.

CEO of Syscap, Philip White, has stated that although businesses can understand that risk has to be priced into loans they feel that the cost of borrowing now far exceeds the risks.

 White went on to say:

“While banks argue that the low level of lending is because there is less demand for funds, businesses are saying that the high cost of loans is what has depressed demand. Good businesses shouldn’t be punished for the past lending mistakes of the banks but that is what is happening.”

The research conducted also shows that whilst 3% of businesses believe that their ability to access bank lending has improved over the past year, 38% feel that it is now much harder to secure financial support from the bank than it was 12 months ago.

Of the 80 small businesses questioned over one third say they are holding back from investing further in their business because they are unable to secure funding.

As small businesses continue struggling to secure funds from their bank, many are now considering changing banks altogether.

20/11/09