The Forum of Private Business (FPB) has learned that banks are imposing a raft of charges, increasing interest rates and demanding personal guarantees as preconditions for lending to small businesses, including under the Government's Enterprise Finance Guarantee (EFG) scheme.
According to the FPB's latest research the cost of finance is a major issue for 63% of respondents. Almost one in five (19%) said it has become a ‘very serious' concern.
"Recent data shows that, despite the rate of new EFG applications slowing, the overall availability of lending is beginning to improve slowly," said FPB spokesman Phil McCabe "However, it is becoming clear that steep interest rates, a range of charges and demands for additional security are combining to create a significant cost barrier preventing viable yet struggling firms from securing the funding they need."
He added: "The tragedy is that, as a result of this, often these small firms are not able to satisfy orders and exploit other opportunities that exist. Many then have no alternative but to close their doors."
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