Partner Article

Businesses find it easier to get new loans

Businesses are finding it easier to obtain new credit for the first time this year, and expect the situation to improve at a similar rate over the coming three months.

The CBI’s latest Access to Finance Survey also showed the cost of finance has continued to rise, and there has been another marked deterioration in the availability of trade credit insurance.

If those firms seeking new credit lines in the past three months, 27% said that availability had improved, while 10% said it had worsened. The resulting balance is the first improvement in credit supply since the survey began in January.

This improvement was mainly driven by the very largest firms with over 5,000 employees, who saw a strong rise in new credit availability over the past three months, following much more difficult credit access at the start of the year.

However, small and medium sized enterprises (SME) saw a moderate decline in the availability of existing credit lines and expect a similar tightening over the next three months.

Richard Lambert, CBI Director-General, said: “Credit availability had been getting more difficult for many months, so today’s results are positive news. The improvement in access to new credit will help many businesses struggling with the recession, and it is encouraging that its supply is expected to improve in the months ahead.

“Smaller and medium sized businesses are still facing challenging credit conditions and have fewer funding options open to them than big companies. We hope that over time their credit supply will improve.

“It is still unclear when bank lending will be flowing freely again, but for many firms credit conditions are at last moving in the right direction.”

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