By Marcus Leach
Christopher Shaw, CEO of the alternative finance provider for business, Platform Black, has said that despite a headline rise in lending to businesses, it was only to large corporates.
The latest Credit Conditions Survey from the Bank of England has revealed that lending to large corporates had increased, but lending to small businesses was little changed.
"Overall credit availability to the corporate sector was reported to have increased for the second consecutive quarter in 2013 Q1," the BoE survey said. "But the increase in Q1 was confined to large companies; the availability of credit to small and medium-sized firms was little changed."
And Shaw said the figures further highlight banks' attitudes towards what makes a business worthy of lending.
"The headline rise in lending to business is welcome, but sadly it masks the continued polarisation in the banks' attitude to which businesses they see as creditworthy," he said.
"The high street banks' lending criteria are increasingly boiling down to 'big business good, small business bad'.
"Larger firms are being given easy access to credit, while for SMEs it is another matter. The banks are systematically withdrawing credit facilities from long-standing and successful small business customers.
"Given that SMEs provide Britain's economic backbone, and the lion's share of UK jobs, this is a dangerously short-sighted approach.
"True, the banks also report a big fall in the demand for credit from small companies, but given the banks' attitude, who can blame them? Four years on from the credit crunch, increasing numbers of businesses are losing faith in the banks' ability - or willingness - to provide the vital finance that oils the wheels of British commerce.
"The survey's conclusion that demand will increase substantially in Q2 is bang on. It's just that this demand will not be focused solely on the banks. The dramatic growth in alternative forms of finance is proof that the banks have lost their monopoly on business lending."
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