Home Business Lack of Bank Loans Causes Nearly 70 Firms a Day to Fold

Lack of Bank Loans Causes Nearly 70 Firms a Day to Fold

by Dave

Almost 70 businesses are collapsing every day due to the lack of availability of loans according to researchers, which is the largest number for 2 years. During March 2012, 2,112 businesses became insolvent which is an average of 68 per day. This is the largest number of business closures since March 2010 and is largely attributed to the reluctance of banks to issue loans.

In a report by the financial information company Experian said that there are 4 main business sectors that are dominating the list of failed businesses. Those sectors are leisure and hotels, buildings and construction, business services and non-food retailing.

Research company BDRC Continental also agrees with Experian’s findings saying that small firms wanting to borrow cash cannot find a bank that is willing to help them. Their report was based on interviews with 15,000 company bosses.

This is the largest investigation conducted in the UK into small businesses and their relationships with British banks. Their findings show that a third of businesses failed to secure a loan that they had asked for. One in five businesses was also found to have had overdraft application or renewable requests refused.

These reports contradict figures given out by banks claiming that they approve 80% of received business loan applications. They state that lending has declined due to a drop in applications.

MPs recently warned that small businesses are facing ‘serious and often insurmountable problems’ in getting money from banks at a ‘reasonable’ rate.

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