Banks in Scotland and throughout the UK have continued to reduce the amount of money they are lending to small businesses, as alternative financing picks up the slack.
The latest figures released by the Bank of England show that traditional loans are down by £300 million in the first three months of the year.
A statement released by the BoE said the findings are indicative of a continuing trend to reduce traditional lending to businesses.
The fall comes on top of a £2.4 billion drop in lending in the last quarter of 2012. Moreover, it comes despite the Government’s Funding for Lending scheme, which was meant to boost the market, being extended in January.
However, despite the drops in traditional commercial finance for Scottish companies, factoring brokers here are helping firms find new financial strategies.
The British Chambers of Commerce (BCC) expressed its disappointment with the data, with its director general, John Longworth, saying:
“It is a concern that lending continues to contract despite the Funding for Lending Scheme having been in place for nearly a year.”
The DG for the body, which represents more than 100,000 businesses across the UK, continued:
“The real test for Funding for Lending is whether it is able to get credit flowing to young and fast-growing businesses. Unfortunately many of these growth firms are still being left out in the cold.”
Many younger companies and start-ups in Scotland and across the nation benefit from asset-based lending, using it as a flexible and effective mechanism.