London: The proportion of Britain’s small and medium-sized businesses (SMEs) borrowing money from external sources was at its lowest for at least two years in the first quarter, a survey showed on Thursday.
The quarterly SME Finance monitor found 39 percent of the 5,000 firms surveyed had used finance such as loans, overdrafts and credit cards.
That was down from half in the same three months last year and was the lowest since the survey began in early 2011.
Only 7 percent said they would have applied for a loan or overdraft over the last year but something had stopped them, such as the hassle of the process or being discouraged after making informal enquiries at a bank.
Three-quarters of businesses had not applied for funding over the last year and said nothing had put them off.
The British government has tried to promote lending to small businesses to help to reinvigorate economic growth and last month provided more incentives to get banks to lend.
The British Bankers’ Association said: “In difficult economic times businesses are choosing to pay down debts rather than take on more borrowing.”
The BBA said that UK banks were making funds available and were currently offering some of the lowest interest rates in history. “There should be no doubt that now is a good time for businesses to go and see their bank if they want to borrow,” it said in a statement.
The SME survey also found almost half of the firms planned to grow in the next 12 months, but they still considered the economic climate the biggest obstacle to running a business.
The survey was commissioned by the Business Finance Taskforce, which was set up by the UK’s six largest banks following a government report into private sector finance. BDRC Continental carried out the survey.