Businesses report worsening access to finance situation

Access to finance remains a serious problem for British businesses, despite the Bank of England pumping £200 billion into the economy to boost money supply and stimulate lending.

In the latest Monthly Business Survey, published today by the British Chambers of Commerce, 33% of companies reported that accessing finance had been more difficult over the last three months. This compares with the same question asked in June, when 20% of businesses believed access to finance had worsened.

Furthermore, the number of firms reporting an improved access to finance situation fell – dropping from 6% in June, to just 3% in the latest survey.

Despite the results pointing towards continued lending constraints, of the 400 businesses questioned, 64% said that their biggest barrier to growth over the next 12 months was a lack of customer demand.

Commenting, David Frost, Director General of the British Chambers of Commerce, said:

“Our latest survey results show that the biggest issue facing British businesses is still demand for products and services. This means that any economic recovery is still fragile.”

Mr Frost added: “It is clear that the huge sums that have been injected into the financial system by quantitative easing are still not reaching small and medium-sized businesses in anything like the scale required for business to invest for future success.

"The Pre-Budget Report on December 9th must include measures that encourage companies to invest and improve confidence. Announcing that 2011’s planned increase in National Insurance contributions will be scrapped would be a good start.”

Ends

Media Contact:

Sam Turvey
Tel: 020 7654 5813
Email: s.turvey@britishchambers.org.uk

Notes to editors

November 2009 Monthly Business Survey results (400 respondents)

How many people are employed by your business in the UK (including full and part time staff?)
0-9    47%
10,49 32%
50-99    11%
100-249    4%
250-499   2%
500+  4%

Which statement below most closely matches your business’ experience over the last 3 months:
Finance is easier to access than before    3%
Finance is more difficult to access than before   33%
No change in access to finance  64%

Which one of the following is the biggest barrier to growing your business over the next twelve months?
Lack of customer demand     64%
Lack of credit/finance   18%
Regulation   10%
Exchange rates   4%
Cost of inputs  4%

Are you actively considering changing your principal bank over the next three months?
Yes 14%
No 86%

If yes, which of the following are reasons why?
Increased charges 7%
Changes to terms and conditions  5%
Withdrawal of facilities 3%
Relationship difficulties 5%
Other  4%

June 2009 Monthly Business Survey result on access to finance question (400 respondents)

The size break down of firms is as follows:
0-9 Employees: 41.2% of respondents
10-49 Employees: 33.8% of respondents
50-99 Employees: 11.1% of respondents
100-249 Employees: 6.3% of respondents
250-499 Employees: 2.6% of respondents
500+ Employees: 5.0% of respondents

Firms were asked how their ability to access finance had changed over the last 3 months:
6% stated that it had improved.
74% stated that it had remained the same.
20% stated that it had worsened.

The British Chambers of Commerce (BCC) is the National Voice of Local Business.
The BCC sits at the heart of a powerful nationwide network of Accredited Chambers of Commerce serving business across the UK, which employ over five million people.