Startup Revolution

Bank lending is expected to fall this year.According to the Ernst & Young Item Club lending by UK banks will fall in 2012 for the first time since 2009. The forecast predicts corporate lending and consumer lending will be down 5.7 and 5.4% respectively. When compared with the 4.3% increase in total lending witnessed in 2011 this is clearly a worrying sign, although the Item Club does predicts there will be a 0.9% increase next year.

Neil Blake, senior economic adviser at the Item Club, says, "Funding for small and medium-sized enterprises is likely to be particularly difficult to obtain as banks seek to reduce credit risk. The average interest rate on smaller loans, of £1m or less, is already double that charged on loans of £20m or more, and we expect this trend to continue. As these young companies tend to be high-growth businesses, this will have adverse knock-on effects for economic growth."

Following Project Merlin an increase in bank lending to businesses was seen in 2011,  although small businesses still struggled to obtain finance while larger firms did access funds. With finance for SMEs proving difficult to many businesses, it's no surprise that the Item Club’s report suggests a 42% rise in loans provided by alternative consumer credit providers since 2007.

If you are seeking funding for your business, then talk to the experts at StartUp Revolution about how they can help you.

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