Lack of lending down to banks
By Marcus Leach
The British Bankers' Association (BBA) have announced that unsecured borrowing through loans and overdrafts has dropped by 7.7% in the year to September.
The official line from the BAA is that businesses have been waiting for an improvement in trade prospects before borrowing. Although businesses themselves will tell you a different story altogether.
The banking body's notion that businesses have "no appetite" to take on new debts, as the UK economic outlook remains uncertain, seems a little far fetched.
Not only do businesses refute this claim, research proves that it simply isn't the case.
"Even fast growing e-commerce businesses struggle to get the right access to financing," said Christoph Rieche, CEO & Founder of iwoca
"Many e-commerce retailers are very profitable but too small and perceived as high risk. Banks do not recognise the value of their digital presence as they don't look at innovative data such as customer feedback scores on eBay or Amazon although these factors reveal a lot about their current and future performance."
Rieche's view is supported by the research carried out by Platform Black, the alternative finance provider, who found that more than 84% of firms rate the banks’ reluctance to offer credit as a barrier to success.
The research also shows that bank credit clearly remains elusive, with 70% of those who approached their bank about a business loan or an overdraft not applying because the process was too lengthy.
"The research shows that on the business front line, there is a huge gulf between rhetoric and reality," said Platform Black CEO Christopher Shaw.
"Many SMEs feel the banks' claims that they are open for business and willing to lend are sounding more absurd by the day. Many banks now concentrate more on repairing their balance sheets than lending. Even vibrant businesses are routinely having... continued on page two >