Requests for SME funding from banks and building societies have declined to their lowest level according to the SME Finance Monitor Q3 2012 report. This finding strengthens the argument for a British Business Bank and underlines the importance of selective invoice finance.

The Q3 report makes it clear that small business confidence in traditional banks and building societies remains very low, despite government initiatives to boost SME lending. The number of requests by SMEs for loans, overdrafts and other credit has never been so low.

In addition, the report has found that first-time applicants, in particular smaller and newer companies, are still the least successful when applying for credit. However, it also reported that most applications for new or renewed applications were successful. In short, the banks and building societies continue to act very cautiously.

While this comes as little surprise to most, it doesn’t mean that conditions are any less frustrating for small companies in need of credit, whether in terms of start-up funding or to maintain cash flow. As such, the findings are likely to strengthen the case for a British Business Bank that bypasses the traditional banks, a subject that small businesses will be hoping the Chancellor covers in his Autumn Statement.

The findings of the SME Finance Monitor Q3 2012 report also highlight the role of alternative finance and, in particular, the sector’s key SME credit facilities, such as selective invoice finance. With the banks and building societies showing no signs of relaxing their attitudes to SME lending, it is imperative that businesses can call on small business lending products such as invoice discounting and factoring.

To find out more about A&T Business Associates services, contact us on 01903 602211 or info@atbusinessassociates.co.uk.