As small business borrowing falls, banks have admitted that they are encouraging the hard sell of more expensive options for credit. Small and Medium Enterprises in all sectors have said that they are being offered alternatives to more expensive overdraft facilities. This follows as the rate of borrowing by small businesses fell by three percent in February this year.
According to the Trends in Lending survey, which is published every three months by the Bank of England, some of the main UK lenders have admitted that they are looking to raise awareness of the existence of alternative products for small businesses looking for credit. However, these are also more expensive than overdrafts in many cases. The survey has also revealed that small businesses are much more cautious when it comes to borrowing, applying for much smaller amounts than the previous year.
The overall value of new applications for overdraft facilities and loans fell by 19 percent in the months from September 2010 to February 2011, compared to the same period a year ago. According to the banks, this could be because many small companies still remain cautious.
Outsourcing to a reputable small business accountants will ensure that a financial strategy is in place, with finances carefully monitored. A low cost accountants will help you to seek the most economical solution to financing your business, without having to opt for expensive alternatives. Having a strategy in place is crucial for any business, especially as the economy struggles to stabilise.
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