UK small businesses are confident in bank funding

UK businesses feel confident that bank funding is readily available to help them, a new study reveals.

The UK’s business owners and small businesses are confident that bank funding is available, but these businesses are yet to be convinced about the merits of borrowing more, according to the latest Owner Managed Business (OMB) Barometer from Bank of Cyprus UK.

These findings come on the heels of the Bank of England’s new £100 billion Term Funding Scheme, announced on 4 August 2016.

The OMB study states that over half (52 per cent) of business owners and small businesses are confident in their bank funding being provided, whilst only 10 per cent are not confident. This represents a steady increase from previous studies, where less than half of these businesses expressed confidence, 45 per cent and 39 per cent in August 2015 and 2014 respectively.

Almost three quarters (74 per cent) of these businesses are satisfied that their current borrowing commitments are sufficient to meet their cash flow and business investment needs over the next 12 months. Just over one in ten of UK’s business owners and small businesses plan to apply for new or increased facilities from their bank (13 per cent).

The Bank of England’s new Term Funding Scheme has a capacity of £100 billion and provides funding for banks at interest rates close to the Bank of England’s record low interest rate of 0.25 per cent, supporting growing banks in their efforts to pass on lower rates to small businesses.

Nick Fahy, chief executive officer at Bank of Cyprus UK thinks that the UK’s business owners and small businesses are showing increasing confidence that they can turn to their banks for new or increased lending.

Fahy says, ‘It’s important that these businesses continue to take advantage of a highly competitive lending marketplace and low interest rates and the Bank of England’s Term Funding Scheme should not be overlooked.’

He concludes, ‘We hope the Bank of England remains committed to this scheme. In light of the Brexit referendum vote it’s essential that the nation’s vital bedrock of businesses – Britain’s independent high-street retailers, family businesses and shopkeepers – have access to the best rates during these times of uncertainty.’

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