Small businesses ‘wary of banks’

Small businesses seem to be reluctant to approach the banks when it comes to seeking finance, according to the Business Banking study carried out by Charterhouse research. Over the past 12 months, only a third of such businesses have sought some form of finance from banks.

Mark Dennis, director at Charterhouse research, said, “In a market where businesses seem to be crying out for help, only the minority appear to be reaching out to the banks for funding. We believe there is a blanket perception that banks are simply not lending, particularly among start-ups and smaller fi rms, so they’re not even putting in the request.

“Yet our study also shows that the banks are indeed lending, with the majority of applications in 2010 being granted in full, so there is a mismatch between reality and perception.”

Some of the key elements to the study were as follows:

• 28 per cent of start-ups claimed that the availability of funding was poor
•  25 per cent of established smaller firms believed that availability to be poor
•  Only 16 per cent of larger firms believed it to be poor.

“Our research suggests that for some businesses at least the issue is more about negative expectations than a genuine lack of funding,” said Dennis. “Therefore, perhaps start-ups and smaller businesses need greater support and help in knowing exactly what their funding options could be.”