More companies relying on plastic after banks refuse to help
Almost two in three firms seeking bank finance in the past year were rejected, often forcing them to fund their firms with credit cards, new research reveals today.
An Institute of Directors study showed that one in four firms had tried to access finance from their banks, but almost 60% had their application rejected.
The survey of more than 1,000 company directors contradicted claims that lending demand was being met by the banks, it said.
The IoD said of equal concern was that promised Government support in the form of the Enterprise Finance Guarantee was not getting through.
The IoD’s Miles Templeman said: “The fact that over half of all businesses seeking finance last year were turned away by their banks is totally incompatible with the banking sector's position on the state of lending in the UK.
He added: “It seems that more businesses are turning to forms of unsecured finance, such as credit cards to get them through their short term spending needs.
“The low interest rates on credit card balance transfers may partially explain the increasing use of this form of finance, but any contraction in credit card finance could see significant price hikes, adding to the already grave difficulties that many businesses are having accessing funds.”