Little improvement in demand for business loans

Loan applications from SMEs are still very subdued, new figures suggest.

In its latest quarterly Trends in Lending survey, the Bank of England reported that request for loans from businesses with sales up to £25 million were "broadly flat, or negative, over the preceding six months".

There has been a decline in the sums asked for too. According to the survey, the value of applications for new term loan and overdraft facilities in the six months to February was 19 per cent down compared with a year ago.

The Bank said: "Some lenders reported that demand for credit remained muted because SMEs were cautious about business prospects."

The Bank of England survey also highlighted another trend. Increasingly, lenders are edging business customers with overdrafts towards alternative credit facilities.

The Bank added: "In recent discussions, a number of the major UK lenders reported that they were seeking to develop improved awareness of alternative credit products, such as leasing or invoice finance, among their SME client base and client-facing staff."