SME worry at bank loans
The Bank’s quarterly Trends in Lending report found that the total stock of lending to businesses fell by about £2.5bn in the three months to August.
Credit conditions continued to be tighter for small and medium-sized enterprises compared to larger companies, according to the Bank’s networks of agents.
Small businesses are using personal loan to fund their operations or holding sizeable cash balances because of concerns about the continuing availability of overdraft facilities, according to the Bank of England.
They added that some small businesses were reluctant to approach banks for fear that doing so would lead to an increase in the cost of their existing loans or a reduction in their overdraft limits. This is despite lenders telling the Bank that the availability of credit to small businesses has remained stable or eased a little.
Lenders also said that they are less optimistic about credit conditions for small businesses in 2012 than they were six months ago.
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