The Bank of England reports that lending to UK companies reduced by £4.6 billion in September, which made the one year growth the lowest since 1999, when records started being kept.
While some small businesses said they had problems accessing loan funds, lenders said that borrowers were very wary about taking on debt and that the funds the banks had available were not being accessed.
The Royal Bank of Scotland, now government controlled, said they had £27 billion in business loans that were approved and that had not been taken up. Lloyds Banking Group Plc, which is now 43% government owned, said they also had tens of billions of approved loans that are not being used.
HSBC Holdings Plc said that they had £1 billion in additional loan funds available for businesses and that only £600 million had been borrowed. They also said that debt repayments had accelerated.
The government’s contribution of £58 billion in bail out funds to the Royal Bank of Scotland and Lloyds Banking Group Plc came with a promise that they would increase lending by £25 billion and £28 respectively over two years.
The Bank of England reports that consumers in the UK currently have £1.46 trillion in debt, more than the country’s gross domestic product, however consumer borrowing fell by £262 in September, the third month in a row of falling consumer debt.
At the same time, a British Chamber of Commerce survey in November found that a third of small UK firms, that is with fewer than 50 staff, found it more difficult to get loans from banks since June.
So there is a situation where larger firms have substantial loan funds available to them, which are not being taken up but many small companies are still not able to borrow what they require.
We assist small UK firms by sending them prospects at no cost from our Local Search facility in our UK Business Directory. Most of the 1.6 million UK companies listed in our directory are small businesses.
Monte Huebsch, CEO
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