Banks still resist small firm lending

Small businesses are continuing to experience difficulties in accessing finance, according to the Bank of England.

Evidence provided by the Bank's network of regional agents suggests that credit conditions are almost back to normal for large firms.

But smaller enterprises are still finding it hard to secure bank lending.

In its report, the Bank of England indicated that a proportion of smaller firms have more or less given up hope of persuading banks to lend to them.

As a consequence, the cycle of credit deprivation becomes self-fulfilling. As firms back away from asking their banks for credit, so the banks confirm their own beliefs that demand for business credit is weakening.