There are tentative signs that more SMEs are securing loans according to a new survey by the EEF.
Despite data earlier this month that banks had missed its government-set lending target to small and medium sized companies, the manufacturers’ organisation found that as many firms were reporting the availability of new lines of borrowing as those who reported a decrease. This compares with a balance of -11 per cent in the previous quarter.
However, rising costs could remain a challenge according to the survey because while fewer companies were reporting rising rates on existing facilities, a balance of 22 per cent of companies reported an increase in the overall cost of credit in the past two months, little changed from the previous quarter. On new lines of borrowing, a balance of 28 per cent of companies reported an increase in the overall cost.
EEF Midlands Region Director, Richard Halstead, said: “For the first time since the recession ended, manufactures are reporting improving access to finance. Hopefully, this will translate into better news on new lending in the coming months. But availability is only part of the story and we also need to see costs coming down.
“Ensuring companies have access to the finance needed to invest and grow is critical for the recovery. We need to see a sustained improvement before concluding that the actions taken by banks and government are bearing fruit and that no further measures are required “