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Business borrowing confidence on the up

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16th Feb 2010
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Businesses are five times more confident in their ability to access financial support this year than they were last year, according to a new study of UK business owners.

In 2009 just 8% of privately held business owners were able to get hold of the funds they needed, but this has jumped to 44% in 2010, said auditors Grant Thornton International.

This follows a recent report from the IoD which indicated that nearly 60% of businesses seeking finance in 2009/10 were rejected by their bank, and 20% were financing their business to some extent with credit cards.

Grant Thornton's latest International Business Report questioned 500 privately held business owners across the UK and found that despite increasing confidence in their ability to access finance, firms were less happy with the support they received from lenders compared to last year. Just 69% of business owners were satisfied with the level of support they received from their lenders – a drop of 10% on last year’s figure.

For businesses looking to expand this year, the biggest obstacle was a reduced demand for products and services (cited by 35% as their main barrier), followed by red tape (a problem for 28%) and a shortage of working capital (18%).

On a more positive note, just 13% identified the availability of a skilled workforce as a constraint – the current high unemployment level has increased the pool of skilled workers available.

“This increase in optimism supports the view that UK lenders are loosening the tight controls placed on finance as the economy begins to edge out of recession”, said David Campbell, regional managing partner at Grant Thornton.

Despite a generally upbeat outlook, businesses should continue to exercise caution warned Campbell: “Concerns over demand for products and services are the biggest threats to expansion. It is clear that the economic crisis and its effects on consumer and business confidence are going to be with us for some time".
 

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