Partner Article

Small businesses â??still borrowing'

Banks are still lending money to small businesses despite the effects of the credit crunch, a report has revealed.

The study, by the British Bankers’ Association, found term lending by the main high street banks grew by more than 10% to £44bn in the twelve months leading up to June.

Borrowing on overdrafts stood at £9.2bn - 3% higher than at the same time in 2007.

The figures also showed businesses had established 543,000 new banking relationships, with more than two in five businesses opting for online banking.

Unsurprisingly, perhaps, the real estate sector has borrowed the most in the past 12 months, with loans of more than £20bn. The next highest borrower was the wholesale and retail sector, which borrowed around £7bn, followed by the hotel and restaurant industry, which borrowed more than £6bn.

David Brooks, the BBA’s statistic director, said: “Banks are still providing finance to support small businesses in the slowing economy, despite the impact of the credit crunch on lenders. In the face of weaker trading conditions, businesses are using all the cash they generate, while those seeking finance are generally taking fixed rate structured loans or using previously agreed facilities.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .