Lending to small business: don't blame the banks ... - The Guardian

The Bank of England survey shows a drop in demand from small companies. Photograph: Jonathan Brady/PA

It's now five years since Britain first dropped into recession and during that half decade there have been regular growls of complaint from small businesses about the raw deal they have been getting from the banks. The Federation of Small Businesses has insisted that the flow of credit has dried up.

Not so, say the banks. This is a demand problem not a supply problem: there is money available if only small businesses apply for it. The Bank of England's latest credit conditions report suggests that the banks may have a point, since there was a "significant" drop in credit demand from small companies in the first three months of 2013. But not so fast. The drop in demand may be the result of companies simply giving up on the banks and looking for other lending channels. The growing importance of crowdfunding and peer-to-peer lending suggests this might be the case.

Source: http://www.guardian.co.uk/business/blog/2013/apr/03/bank-lending-small-businesses

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