Lending issues still haunting small businesses

Small businesses are still be haunted by poor lending rates from banks, recent figures have revealed.

The data, released by the Bank of England, showed that bank lending to British businesses fell at the fastest pace in almost two years in February.

The Trends in Lending report confirmed that lending from building societies and banks fell by £4 billion, which was the biggest drop since March 2010 when lending dropped by £4.2 billion.

A generally risk averse attitude has pervaded in bank lending since the recession, with a poor economic outlook and uncertainty regarding the eurozone held accountable. With this in mind, John Walker, national chairman of the Federation of Small Businesses, called the latest figures “very disappointing, but not surprising”.

The news comes after the Office for National Statistics (ONS) revealed that the UK fell back into recession during the last quarter, suggesting that the country's economic strife is far from over.

The Treasury Select Committee has recently called on the government to do more to more to stimulate bank lending to small businesses in a bid to get the economy moving. A report from the committee stated: “Access to finance for small and medium-sized businesses remains a significant problem.

“While these exceptional market conditions continue, the government should regularly publish its own estimate of the degree of dysfunctionality of the market, with proposals for remedy.”