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Firms 'put off' talking about business lending

Date Added: 28/09/2011  

Companies such as those facing a winding up order may be reluctant to discuss their finances with banks as part of an application for business lending.

This is according to the business and enterprise minister Mark Prisk, who stated that trust between the financial institutions and organisations need to be restored if the flow of credit is to be improved.

"The government wants to see an open dialogue between banks and British businesses, supporting entrepreneurs who want to invest and create new jobs," he said.

Conservative MP Mr Prisk stated that the coalition will therefore support any initiative aimed at increasing business lending.

He was commenting after Barclays announced it is launching a range of clinics and is hoping to reach hundreds of firms and improve their confidence relating to accessing finance from banks.

Antony Jenkins, chief executive of Barclays Retail and Business Banking, claimed that it is "committed" to aiding the UK's economic recovery and understands the vital role enterprises are to play if this is to happen.

Barclays stated that it approves a lending application from a company every four minutes and the balance of money held on business accounts has also risen, which the bank says is due to an increasing level of confidence.

Statistics have been released recently showing only 15 per cent of small firms applied for finance in the last 12 months, which indicate there is an unwillingness from entrepreneurs to ask banks for their help in keeping a venture alive.

This comes shortly after business secretary Vince Cable stated that the lack of business lending at the moment is putting the UK's economic recovery at risk.

Speaking to the Daily Mail, the Liberal Democrat MP explained that he has been told by many companies of how banks no longer want to know when they apply for finance.

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Posted by Michael Beam

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