Credit is still not getting to small firms through the government's latest scheme with the Bank of England reporting that lenders are still making life difficult for those SMEs looking to get funding.
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Despite the high profile launch of the Funding for Lending scheme back in August, which was designed to offer government-backed guarantees to encourage banks to give small firms credit, conditions appear to have got worse.
The Bank of England's agents report found that lenders were still tightening terms for small firms and that was in addition to overdrafts being generally reduced.
"Some business lenders appeared still to be tightening terms. This was a particular problem for some SMEs, where the availability of overdrafts was said to be continuing to reduce, with banks preferring asset-backed lending and seeking additional personal guarantees," the Bank of England report stated.
"Among medium-sized businesses there was growing evidence of a drift to non-bank lending, with a number of contacts, including property developers, seeking longer-term finance than banks had recently been willing to offer," it added.
The Bank of England also stated that payment times had also slipped adding to the pain for small businesses having to wait longer for payment to keep their cash flowing.