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Small businesses reluctant to approach banks

Over the last 12 months, only a third of businesses (whose turnover is under £1bn) have sought some form of finance from the Banks.


Small businesses reluctant to approach banks

Over the last 12 months, only a third of businesses (whose turnover is under £1bn) have sought some form of finance from the Banks.

The most recent Business Banking Study, carried out by Charterhouse Research, has shown that small businesses seem to be reluctant to approach the banks when it comes to seeking finance.

Mark Dennis, Director at Charterhouse Research, says, “In a market where businesses seem to be crying out for help, only the minority appear to be reaching out to the Banks for funding. We believe there is a blanket perception that Banks are simply not lending, particularly amongst start ups and smaller firms, so they’re not even putting in the request. Yet our study also shows that the Banks are indeed lending, with the majority of applications in 2010 being granted in full, so there is a mismatch between reality and perception”.

Key elements that the  Business Banking Study found include:

*In terms of the perception of the level of funding available,
smaller businesses appear less favourable:

*28% of start ups claim that the availability of funding is poor

*25% of established smaller firms believe the availability to be poor

*Only 16% of larger firms believe it to be poor

In terms of actually seeking funding from the Banks, there appears
to be little difference between business size:

*37% of start ups have applied for funding

*34% of established smaller business have applied

*33% of larger firms, with a turnover of up to £1bn have applied

“Our research suggests that for some businesses at least the issue is more about negative expectations than a genuine lack of funding. Therefore, perhaps start ups and smaller businesses need greater support and help in knowing exactly what their funding options could be” continued Dennis.

These findings are taken from the Business Banking Survey, a syndicated study of 17,000 British businesses each year, ranging from start-ups to companies with a turnover of £1bn. The study is conducted on a quarterly basis.

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