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Business lending fell in October

Date Added: 01/12/2011  

Firms may be in need of business debt advice as a result of a lack of available finance from the UK's major banks, following the release of new official figures.

According to the Bank of England's latest statistics, lending to UK companies fell during October, despite the Project Merlin deal between the coalition government and the UK's banks.

This drop was at an annualised rate of 4.6 per cent and over the course of the month, lending to firms was down by £1.6 billion in total, reports the Financial Times.

The release of the figures comes shortly after chancellor of the exchequer George Osborne announced more plans to boost the business lending situation in a bid to aid private sector companies to grow and support the economy through the creation of jobs.

He is making a £20 billion fund available to underwrite bank loans in the hope they use the money to improve the flow of credit to small businesses at affordable levels of interest rates.

Deposits made by organisations into the UK's banks also fell over the course of the month by a total of £2.2 billion, perhaps showing a lack of faith in the institutions from entrepreneurs.

"Deposits, which anecdotal evidence suggests are being used when bank credit is not available, have contracted over the three months to October at an annualised pace of 5.4 per cent," noted the news provider.

Speaking on the BBC Radio 5 Wake Up to Money podcast last month, Adam Marshall, director of policy at the British Chambers of Commerce called for more communication between small businesses and the UK's major banking groups.

He argued one of the major issues at the moment is the speed of the access to lending and claimed this needs to be improved if the private sector is to be able to support the economy.

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Posted by Michael Beam 

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