Tracy Ewen, managing director of IGF Invoice Finance, comments on the Bank of England’s Credit Conditions
“The news that credit approval rates for small businesses have risen by 26.6% is an encouraging sign that a far greater number of firms have been granted access to vital cash in the past quarter.
Whilst it’s great to see strong support from banks and a growing appetite for credit from small businesses, many companies remain hesitant to explore this avenue of finance. Our own research into borrowing attitudes amongst SMEs revealed that nearly half of SME owners say that borrowing always makes them nervous. Without encouraging SMEs to use credit to grow, supply will falter – a trend reflected by the Bank of England, who have predicted that approval rates are soon expected to plateau.
Changing SMEs’ perceptions towards borrowing – and opening themselves up to alternative sources of finance once bank lending plateaus - requires SMEs to be made fully aware of what type of credit sources are appropriate for what situation. Understanding the different sources of finance that are available and using any free, independent advice to make an informed decision, will help make more small businesses embrace rather than shun credit.”
Bank of England’s Credit Conditions Survey