SMEs 'suffering from tight lending conditions'

20/08/2010

Lending to small and medium-sized enterprises (SMEs) fell in June, showing how credit conditions are remaining difficult for small businesses, according to the Bank of England.

Loans to SMEs dropped by two per cent compared to the same month last year, the Bank's Trends in Lending report revealed.

"Contacts of the Bank's network of agents noted that credit conditions for smaller businesses remained tighter than for large corporates," the report said.

"Some major UK lenders expected demand from SMEs to remain muted in the coming months."

The new repayment figure for June was £3.5 billion, which was higher than the £2.2 billion in May, but still below last year's average.

Recent data from the Department for Business, Innovation and Skills, showed that lending through the Enterprise Finance Guarantee scheme fell from £254 million in the first quarter of 2009 to £186 million in the same period in 2010.

Posted by Sam Williams