So on the one hand we appear to have reports saying that banks are not lending to businesses, and then we hear the banks saying “but nobody wants to borrow”. Is it any wonder that people get confused.
The majority of businesses are choosing not to seek extra funding, claims a report from HSBC.
According to the bank, four in five of businesses say they don’t need money because they are tightening their belts and running off their own resources, with only 15 per cent currently seeking external investment.
Noel Quinn, HSBC head of commercial banking, says: ‘Overall, we are still experiencing a lack of demand for finance from businesses, despite having made funds available. We believe that now is the time for companies to revisit financial plans and consider using different types of finance for the future.’
Of the 2,100 small businesses surveyed, 32 per cent said access to finance was likely to be a key challenge in 2010. Some 17 per cent said they weren’t seeking finance due to the banks not lending.
However, according to the Forum of Private Business, the cost of finance remains a major problem for many SMEs, with three in five reporting that it is too high.