Banks in UK Restrict Lending to Small Businesses

Posted on August 17, 2010 by

The Bank of England, reported that banks have made conditions for lendings to SMBs tighter. This resulted in decrease in lending rates to SMBs in June.

According to a report on lending trends, by Banks’s, lending to small businesses squeezed in July, with all the businesses irrespective of size repaying an amount of more than £3.5bn(it was £2.2bn in May) they borrowed. This trend even continued in July too. The SMBs were the most affected one’s with this trend, as the credit conditions were more tighter for SMBs than larger companies. The base rates and rates charged by lenders fell slightly for the loans of bigger firms, but were changed a little for smaller firms.

Apart from the SMBs, even the home owners were also hit by with mortage approval levels showing decline by 1000, reached 47,000 in July, due to the restrictions in mortage finance.

To overcome this situation of restricted credit, the banks have to limit their spending.

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