FSB Calls for Banks to Lend to Businesses

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FSB Calls for Banks to Lend to Businesses

Fri, 19 Feb 2010

Businesses are having to fund their own growth in light of the scarcity of affordable credit from banks, according to new research from the Federation of Small Businesses (FSB). The FSB conducted a survey in Scotland and found that more than a fifth of company bosses had injected their own savings into their business in the past year. Another 25 per cent of companies had retained profits to finance their business.

Only one third of the 1,200 businesses surveyed had used a bank overdraft to finance their business, prompting the FSB to call for more access to affordable and flexible credit from banks. Indeed, 43 per cent of businesses cited cash flow as a major obstacle to reaching their objectives, while 23 per cent said they needed credit.

Overall, nearly half of the businesses had not borrowed any money during the past year, whereas just a tenth had access to a company loan, personal loan or credit card .

Of those who had borrowings, nearly a third had experienced a change in interest rates, while only one sixth said their charges had gone down, despite the Bank of England lowering the base interest rate .

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