[LONDON] Two thirds of Britain's smaller companies are aiming to pay off their debt and not borrow more, according to a survey published on Thursday.
Many small businesses are wary about borrowing, distrusting banks following scandals including the mis-selling of interest rate hedging products and allegations about the way firms struggling to repay their debt are treated.
The Finance Monitor, carried out by BDRC Continental, found 77 per cent of the 5,000 small and medium-sized companies (SMEs) surveyed in the third quarter were profitable, compared with 69 per cent in the same period last year. "For over a year now, SMEs have been in a more positive mood, but this has not translated into increased appetite for external finance," said Shiona Davies, a director of BDRC Continental.
The survey found that success rates for those that did apply for finance were improving with 71 per cent of all loan and overdraft applications in the last 18 months resulting in businesses being offered credit. "Although most firms are happy with their current arrangements, more of those seeking funding are having their applications approved and reporting that the processs was fast and hassle free," a spokesperson for the British Bankers Association said.