Banks ready to lend to small firms, says BBA

Date: 28th April 2010

Small business owners in the UK could be among those to be encouraged by recent lending figures from the British Bankers' Association (BBA).

According to the organisation, four out of every five business loan applications are currently being approved.

The association said the figure goes against the perception that banks are facing a "credit squeeze".

Stephen Pegge, chairman of the BBA's small business panel, said businesses looking for loan and overdraft facilities in the current market can also benefit from interest costs that are less than half of what was being paid two years ago due to low interest rates.

"Bank lending to small businesses is one of the most important services banks undertake but it's ultimately driven by demand for finance and the quality of applications," he told visitors to a recent Institute of Chartered Accountants in England and Wales event.

"Naturally when sales fall, the demand falls for finance to fund working capital and fixed asset investment - and affordability is stretched," the expert added.

Posted by Emma Clarke