Business loan margins too high, say small businesses in UK

The majority of small business bank account holders in the UK feel that business loan margins as set by their banks are too high, according to a recently published research study.

Syscap, an IT finance provider, conducted the survey, finding that 75 per cent of respondents felt lending margins on business loans were higher than they ought to be.  The figure represents a 2 per cent increase over last year’s 73 per cent rate, Syscap said.

The IT finance firm also found that a scant 8 per cent of small businesses feel their ability to access working capital through business lending has undergone an improvement over the past 12 months.  Meanwhile, one out of every three respondents said that their access has continued to degrade.

Philip White, chief executive for Syscap, remarked that he was disappointed to see such large percentages of firms feel that it was now harder to obtain an affordably priced business loan this year than it was in 2010.  The beginning of the credit crunch was four years ago, said Mr White, yet the conditions in the business lending sector have yet to recover fully despite the passing of years.

In an event to counteract this, Chancellor George Osborne spearheaded Project Merlin, an agreement made between the four largest high street banks in the UK and the Government to increase small business lending in 2011.  Despite this new initiative, the Bank of England reported this past July that small and medium-sized business lending was under its Project Merlin target figures by a sum of more than £2 billion.

Business borrowing is still too little even with Project Merlin, added Mr White.  The chief executive said that there is more yet to be done in order to make borrowing more affordable for smaller businesses.

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