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More small UK firms borrowing money: survey
[LONDON] More small and medium sized businesses (SMEs) in Britain are borrowing money compared with a year ago, a survey published on Thursday showed, as lending to the sector bounces back after the financial crisis.
While British banks have been lending to consumers at the fastest rate since before the 2007-09 financial crisis, and large firms have easy access to funds through capital markets, lending to small businesses has been limited.
Making matters worse, some small firms still mistrust banks, many of which abruptly withdrew funding during the crisis. The Bank of England has said poor access to credit was one reason why British productivity remained weak for years since.
However, a poll carried out by research consultancy BDRC Continental for SME Finance Monitor found that 70 per cent of small firms surveyed are using loans, overdrafts and other forms of finance, up from 65 per cent a year ago.
A quarter of the companies polled are planning to apply for such financing compared with about a fifth in 2012, the survey showed.
The firms surveyed did not include businesses considered "permanent non-borrowers", which have no plans to borrow money.
Larger SMEs with younger managing directors - aged under 30 and with plans to grow the business by 20 per cent or more - are most likely to be willing to use external finance, the survey showed.
81 per cent of loan and overdraft applications made in the past 18 months were approved, the highest ever proportion recorded by the SME Finance Monitor.
The survey, which is the largest and most frequent of its kind in Britain, is commissioned by the Business Finance Taskforce, which was set up by the British Bankers Association in 2010 to review how banks could help Britain return to growth.