According to the recently released SME Finance Monitor, only two-thirds of small firms (that is, those with fewer than 10 employees) are getting the finance they need. A third of small firms are turned down when they apply for loans.
But in fact the news for small firms is worse than the statistics suggest, because half of the small firms surveyed said they wouldn't even apply for a loan in the first place. Why? Because they think they will be turned down.
Widespread mistrust of banking institutions hasn't been helped by the disappearance of old-style branch banking.
The banks need to get it right. But in the meantime firms are relying on other sources of finance, including factoring and leasing - and extended payment terms too. Watch out, that SME may be using your credit line as a bank!
This was first published in July 2011