Credit still a 'roadblock to growth' for small businesses

Mark Carney, Governor of the Bank of England (Getty Images)

Access to credit is still a “roadblock ” to new investment for London’s small businesses, according to new survey data as Bank of England figures.

One in four of smaller businesses in the capital looked at alternative ways to raise finance in the first three months of 2014 — up from 16 per cent a year earlier, according to Western Union Business Solutions’ survey of 270 firms. One in three companies are considering using peer-to-peer lenders.

Of the 23 per cent of London businesses applying for credit in the past year 30 per cent were unsuccessful, up from 23 per cent in the final three months of last year, according to the findings. Only 5 per cent of SMEs believe the cost of bank financing is falling compared to 24 per cent who think it is rising.

UK managing director Christina Hamilton said: “Access to credit continues to be a roadblock to growth. Funding remains elusive and prohibitively expensive for many London SMEs and it is little wonder that businesses are looking for alternative ways to raise finance.”

The Bank of England’s latest Trends in Lending report meanwhile showed overall lending to UK business still 2.1 per cent down on a year ago.

Governor Mark Carney is aiming to revive corporate credit through tweaks to the Bank’s Funding for Lending scheme to encourage business loans and cool mortgage lending.