38% of firms say loans are harder to secure

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The Independent Online

More than a third of UK businesses have found getting a loan more difficult over the past year, which will come as a shock to the Government which has pushed banks to increase lending to companies.

The finance provider Syscap found that 38 per cent of businesses believed securing a bank loan has become harder in the past 12 months than it was a year earlier. Just 9 per cent of respondents reported getting a loan was easier. The situation appears to have improved in recent months, however, with just 14 per cent of companies saying that conditions have worsened over the past quarter.

Philip White, Syscap's chief executive, said the report's findings were nonetheless worrying. "This is an alarming percentage of companies who are actually saying that access to bank loans is still worsening." He said a legacy of bad debts carried by the banks means they are having to reserve large amounts of capital. "This is putting the banks in a bind and the net effect is they cannot meet the growing demand for finance from UK businesses," he added. "Small businesses aren't just making this up. There is a real problem."

The Government has pressed the banks to lend more, especially to small businesses. Vince Cable, the Business Secretary, has accused the banks of "not acting in the national interest", while small business bodies in particular have accused the banks of lending only at prohibitive rates of interest.

The banks say they are providing more loans and that the vast majority are at rates of lower than 4 per cent. They also argue that businesses are not eager to borrow and that most are working to reduce debts.