UK firms 'have lost faith in mainstream lenders'

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UK firms 'have lost faith in mainstream lenders'

Many UK companies have lost faith in mainstream lenders as businesses are not being provided access to the level of funding they need to grow in the present financial climate.

Phil McCabe, a spokesman for the Forum of Private Business, said over-centralisation of lending practices, a lack of lending decision-making powers and an erosion of the importance of local knowledge by branch managers has resulted in companies having less access to funds.

He commented: "I think that really there is a knowledge gap when it comes to how banks and mainstream lenders choose to engage risk when it comes to small business lending."

Furthermore, Mr McCabe added that when companies are able to access loans they are typically restrictively expensive.

According to Liz Dunscombe, director of project and partnership development at Credit Action, there has been an increase in unsecured lending across the UK over recent months to individuals, despite the fact the global financial downturn has applied increasing pressure on household budgets.

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