Steady Rise In Business Loans Reported

Fri, 22 Aug 2008

Small businesses are still managing to raise a considerable amount of debt finance despite the downturn in the economy, new research has revealed.

According to Barclays Commercial Bank of SMEs (small and medium sized enterprises), 16per cent of companies have taken out loans of £500,000 or more since the beginning of the year – up 3 per cent on the same period last year.

"Overall, we have seen a slight increase in loan applications in recent months, in contrast to the trend in 2006/7, while application success rates for established SME customers remain at over 90 per cent," explained Dr Richard Roberts, SME market analysis director for Barclays Commercial Bank .

"The findings of the study indicate that established SMEs are borrowing to capitalise on business growth opportunities and are receiving the support from lenders to do so."

"These figures go against any suggestions that UK SMEs are experiencing limited growth potential and indicates confidence despite current market conditions."

Dr Roberts added: "Many UK enterprises are in a relatively strong position to borrow and this should help these firms to benefit from the upside of the business cycle over the next few years."

The Barclays study sampled more than 600 companies and found 17 per cent had increased their loans compared with 12 months ago, with half indicating a strong increase.

Furthermore, 14 per cent of SMEs said they expected an increase in borrowing over the next 12 months.
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