Despite rising confidence from the small business sector, with job creation and investment intentions also picking up as the recovery takes hold, access to finance remains a major barrier for many SMEs.
While there have been some positive signs, including an uptick in lending to manufacturing and retail businesses compared to the previous year, as a whole the situation represents a major challenge for Britain's small business community.
Commenting on the persistent issues in the SME lending market, business secretary Vince Cable recently admitted, "The shadow of the credit crunch still looms large and too many small and medium-sized businesses are still not able to get the finance they need to grow."
Perhaps more worryingly, another study released earlier this month by the Enterprise Research Council reveals SMEs themselves may in fact play a part in contributing to declining lending patterns, as preconceptions dissuade business owners from approaching banks for finance.
In fact, the report suggests around 173,000 UK small businesses could fall into the category of discouraged borrowers, holding back from seeking funding under the apprehension their application will not be successful. This is despite the fact the research suggests an additional 77,000 businesses would be likely to gain funding if an application was made, allowing these firms to invest in ways to take their operations to the next level and drive economic growth.
As a result, support bodies have pointed to the need to provide small businesses with better information on the full range of financial options available to them and how to maximise their chances of gaining funding when approaching lenders.
"We need our SME lending market to be less concentrated in a few banks, with more diverse sources of finance for businesses," Cable affirms, mentioning the role the Business Bank will play in stimulating lending over coming years.
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