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Businesses 'still struggling to access finance from banks'

Date Added: 15/07/2010  

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Demand for business debt advice is likely to rise after experts warned that many banks are rejecting applications for finance.

According to the Institute of Directors (IOD), tightening lending criteria have led to one in three companies that have applied for finance this year being declined by their bank.

The group said the problem is stemming from the amount of security that is being requested by banks.

Director general Miles Templeman admitted that the IOD is "concerned" about this state of affairs and called for the government to aid the situation.

He suggested that the coalition "clarify the relationship between the state-backed [Enterprise Finance] Guarantee scheme and bank requirements for personal security".

Mr Templeman acknowledged that while businesses should have some "skin in the game", some recent demands have been "excessive".

This comes after the IOD praised the Bank of England's decision to leave interest rates on hold this month, as the UK economy is still "extremely fragile".

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