Banks still not funding small business expansion, finds survey

FacebooktwitterredditpinterestlinkedinmailFacebooktwitterredditpinterestlinkedinmail
hotfrog: no change in lending

hotfrog: no change in lending

Three quarters of small businesses have seen no change in their banks approach to lending despite the launch of Project Merlin, an agreement between the British Government and four major banks, which aims to promote lending to businesses.

The survey by global online business directory hotfrog also found 70% of respondents said they would be able to expand their business if they had better access to funding. Of those, more than 80% would hire at least one additional staff member, with more than a third (37%) able to hire more than one.

“If I could get access to additional funding, I could grow my business and quadruple my revenue,” said Simon Stroud, owner of Testing Made Easy, a water testing and analysis company in Swindon. “I find that the banks’ attitude towards small business is appalling, it feels like they just don’t see small businesses as a viable investment.”

hotfrog, which provides a free internet profile to more than four million small businesses in the UK, found 68% of small businesses responded the news of Project Merlin had not changed the way they intend to approach financing. Of these, 36% said credit conditions are currently too harsh for small business, 23% said their business wasn’t big enough for  banks to loan them money and 14% said the cost of borrowing is just still too high.

“According to our survey, UK small businesses see no improvement in bank lending since Project Merlin was announced,” said David Catterall, managing director, hotfrog. “The results also show a degree of optimism if loans were more readily available businesses would be able to expand.”

When asked where they would get quick funding to support their business, by far the biggest response was by using their own personal savings, 41%, with only 20% percent of respondents saying they would turn to their bank.

“Most small business owners in the UK are sole traders or self-employed and therefore have a credit history for their personal finances. I believe banks take advantage of this and use it as an excuse not to lend funds. In order to save funds, I haven’t paid myself for two years. I am fortunate that my partner works and is able to support us both, but not all small business owners are so lucky,” said Stroud.