Loan approval rate for small businesses at highest level in four years
MORE small firms are being approved for credit than rejected for the first time in four years, according to a new report.
The latest 'bank watch' survey from trade group ISME found that 52pc of applications were approved by the banks in the last three months, compared to 44pc at the start of the year.
That is the first time since 2009 that the survey has shown more approvals than refusals, while the wait time for applications to be processed fell from five weeks to four.
Not surprisingly demand for credit is rising, say ISME.
The report claims more than 40pc of respondents had requested additional or new bank facilities in the last three months, an increase on the 35pc in the previous quarter.
Commenting on the survey results, ISME boss Mark Fielding said the results were "positive".
"Hopefully they are the start of a trend back to 'normal' banking.
"However, the fact that both interest and charges are increasing across the board emphasises the fact that we must maintain a close eye on the bankers in the reduced market, with only two-and-a-half main banks servicing the SME sector," he added.
Despite the improved numbers, some 95pc of small firms believe the Government is having little or no effect on how much credit is available to small firms, while less than 60pc are aware of the Government's much heralded credit guarantee scheme.
Publishing the report, Mr Fielding reiterated his demand for the Government to set up a strategic investment bank aimed at small business sector.
"The need for a new, active and relevant actor in the business credit space is further emphasised by the fact that financial constraints are currently at their most binding, just when capital demands are starting to pick up again," he added.