The banks are starting to lend to businesses again – but only at a penalty rate
Banks are now increasing their lending to UK businesses – in line with their commitments to government – but are only doing so at an increasing cost to firms, according to a survey from one of the nation's leading business organisations.
The Engineering Employers Federation says today that its latest credit conditions survey "provides some tentative signs that the situation will have improved in the second quarter", but that "rising costs could remain a challenge".
The news follows the recent disclosure that the banks have missed their first targets for lending to forms under the "Project Merlin" deal with the Government. The latest evidence suggests that they are more likely to hit their goals in the second quarter of this year, but will do so at some penalty to hard-pressed companies, especially in manufacturing.
According to the survey of almost 500 companies, some 18 months into the recovery, finance availability appears to be starting to ease for small companies. As many small companies reported an increase in the availability of new lines of borrowing over the past two months as reported a decrease, a net balance of nil. This compares with a balance of minus 11 per cent in the previous quarter. There was a similar improvement in the balances amongt mid-size companies.
For existing credit facilities the balance of companies reporting decreased availability dropped from 11 per cent to 7 per cent among manufacturers.
But while fewer companies are reporting rising interest rates on existing facilities, a net balance of 22 per cent of companies reported an increase in the overall cost of credit in the past two months, little changed from the previous quarter, indicating a rise in fees and costs for new credit lines.
Thus, the EEF says that on new lines of borrowing a balance of 28 per cent of its companies reported an increase in the overall cost.
- 1 Jennifer Lawrence scores first UK top 40 single with Hunger Games track 'The Hanging Tree'
- 2 Shia LaBeouf claims he was raped during #IAMSORRY art installation performance
- 3 'You should come to my house and eat cheeses with me': 4-year-old sends adorable love letter to girl at school
- 4 Scientists predict green energy revolution after incredible new graphene discoveries
- 5 Michael Buerk wishes he killed Jimmy Savile when he had the chance - by pushing him overboard a cruise ship
Obama: The only people with the right to object to immigration are Native Americans
Ukip says babies born to immigrants in the UK should be classed as migrants – which would include Nigel Farage’s own children
The young are the new poor: Sharp increase in number of under-25s living in poverty, while over-65s are better off than ever
David Cameron sets out immigration reforms: We should distrust Ukip and their 'snake-oil of simple solutions'
Ukip mocked after mistaking Westminster Cathedral – for a mosque
Tamir Rice: 12-year-old boy playing with fake gun dies after being shot by Ohio police
iJobs Money & Business
Excellent Package: Austen Lloyd: EAST ANGLIA - SENIOR SOLICITOR LEVEL ROLE** -...
£Attractive Package: Citifocus Ltd: Prestigious asset management house seeks a...
£Negotiable: Citifocus Ltd: This is a varied role focusing on the firm's mutua...
£90000 - £140000 per annum + benefits: h2 Recruit Ltd: Are you a high achievin...