Survey Finds UK Small Businesses Suffering from Bank Loan Rejections

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5th December 2012 14:59 - Financial Services

According to a survey of 2,000 small businesses across the UK on behalf of Freelancer.co.uk, this sector is currently relying on a financial boost from alternative means to applying for loans from banks.

More than half (51%) of the small businesses who took part in the study hadn't applied for a loan because they believe banks made the lending criteria too difficult for them to qualify for. Of those who had applied for a loan, 61% had been rejected.

Matt Barrie, Freelancer.co.uk CEO, commented: “The data has shown that banks are still not willing to support small businesses, which are vital to the success of the UK economy.”

Small enterprises are having to find other means of funding to stay afloat - 42% had to use up their savings, 20% borrowed money from friends and family, while 10% had to use their overdraft reserves.

In addition, 20% said the inability to successfully get a bank loan meant that  essential investment to their business wasn’t undertaken and 10% had to stop trading altogether until they could find the crucial funds they needed.

Regionally, Scotland's small businesses were found to be suffering the most, with 82% of the respondents saying they would be prevented from expanding by not having a loan approved and 70% having had a loan they’d applied for rejected.

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