The Cost of Borrowing is too high

Smallbusiness.co.uk is reporting that many small business owners are fed up with having to pay the banks high rates on their business borrowing.

Businesses believe that bank-lending terms are exorbitant, according to research from finance provider Syscap.

Some 90 per cent believe that loan arrangement fees are excessive, while 75 per cent feel that the lending margins on loans are too high.

Philip White, chief executive of Syscap, says: ‘Businesses appreciate that risk needs to be priced into loans but feel that the cost of borrowing now far exceeds the risks.

‘While banks argue that the low level of lending is because there is less demand for funds, businesses are saying that the high cost of loans is what has depressed demand. Good businesses shouldn’t be punished for the past lending mistakes of the banks but that is what is happening.’

Just 3 per cent of businesses believe that their ability to access bank lending has improved over the past year, while 38 per cent feel that it is now more difficult to secure bank funding than it was 12 months ago.

Of the 80 respondents questioned, over a third (36 per cent) say they are delaying investment in their business because they are unable to secure funding. â¨

Research from the British Chambers of Commerce found that access to finance has deteriorated in the last three months, with 33 per cent of companies reporting that funding availability has become more difficult, compared with 20 per cent in June.

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Should not really come as a surprise, but it does go against the grain of what the government is telling us through the media.  What do you think?