High street banks are withdrawing and reducing small firms’ overdrafts at a rapid rate, it has transpired.
New data from the Bank of England suggests that overdrafts worth £5 million have been cut every day since 2011.
The revelation means that hundreds of thousands of British businesses have had their growth impeded and working capital restricted.
In a separate survey of 250 business owners, some 30% of SMEs reported that they have seen cutbacks implemented over the past two years, whilst around 17% have revealed that their overdrafts have been removed altogether.
National business group the Forum of Private Business (FPB) has also reported a decline in business overdrafts, with their use falling from 25% in 2011 to 17% this year.
‘Overall access to overdrafts has stabilised over the last year, but still around 25% feel that access to finance is a barrier,’ commented the FPB’s Thomas Parry.
‘This makes other issues such as late payment and the rising cost of doing business far more important as businesses feel that they have less leeway’.
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