By Daniel Hunter

Small and medium sized enterprises (SMEs) are facing further financial hardship with many high street banks raising their business borrowing rates and cutting lending terms, warns independent mortgage and bridging specialist Crystal Mortgages.

Whereby commercial mortgage departments were lending on average 3.25% over the Bank of England Base Rate (BBR) with repayments spread over a maximum of 25 years, these products are being withdrawn with mean lending rising up to 5% over BBR over a typical period of 15 years.

The company has stated that the latest move, which will make affordability calculations incredibly high for the typical SME, is compounded by the strictest lending criteria high street banks have ever implemented.

“The Government’s increasingly tough demands on capital adequacy is again adversely affecting the business sector that will reinvigorate the UK economy, SMEs." Roger Dewsbery, senior underwriter at Crystal Mortgages, said.

“In a nutshell the banks are having to force up the cost of lending as they are not profiteering from the reserves they are holding onto, and business is again bearing the brunt, putting the borrower in a worse position. This is, of course, if the money is lent in the first place.

“Because of the move we are starting to see even more viable competition from the non-conforming market, and the best deals are available from firms who will individually assess each case and the source the best deal from the market or direct funding streams.

“The need for a whole of market packager, such as Crystal Mortgages, has never been greater."

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