Chief Executive of the NACFB, Adam Tyler, commented:
"We have continued to see the SME community struggling to raise funding and being faced with increased costs. Our latest figures reveal the true position of both excellent and vulnerable businesses across the whole of the UK.
"Despite many lenders' protestations that they are lending more than ever, these figures reveal what anecdotal evidence has already shown: that funding for businesses is still very hard to access. Whilst we are very pleased to report that there is an increase in lending over the last twelve months, this has come from a very small base compared to previous years.
"Our asset finance brokers in particular have struggled to find funders and have relied on one particular source for over a year now. This has meant that many businesses have not been able to renew their equipment or to purchase new for expansion.
"But on a positive note, we have seen an increase of around 29% in vehicle finance business; although this is partly due to the fact that more of our members are now writing this kind of business."
"The increase in invoice finance for the third consecutive year shows that our members are seeking more cost effective borrowing where they can, as overdrafts limits are reduced but costs have increased.
"Short term lending and development funding have also shown a revival over the last twelve months, added to an increase in commercial property lending, which is up 19% year on year. However in 2005, invoice finance was only around 10% of this type of lending, this year it now stands at 26%.
"Around 90% of small businesses bank with the four main high street banks; but when it comes to borrowing SMEs should not be restricted to these lenders. NACFB members have access to over 50 different providers for their clients.
"Businesses do want to borrow; they do want to grow. A recent survey of SMEs showed that only 16% had applied to their banks for borrowing, of which one third were rejected. These businesses need to feel confident when they are considering borrowing, as many are falling at the first hurdle and not even making it in to the current statistics.
"Recent feedback from across the membership has indicated that whilst we saw a criteria ease in the early part of the year, this has tightened up once again."
