Business lending continued to shrink in the three months to February despite the improving economy, the Bank of England said.
Overall lending to UK businesses contracted by £500m in the three months to February, although the pace of the decline has slowed from a £3.3bn fall recorded in the preceding three months, the Bank’s latest report said.
Small business groups raised concerns about the findings, while banks put the negative lending figures down to firms using large cash reserves to pay down their debts.
The Bank’s report said survey evidence indicates that pricing on loans to small and medium-sized businesses has remained broadly unchanged in recent months.
John Allan, national chairman of the Federation of Small Businesses, said this “underlines the ongoing challenges small businesses face in accessing finance.’’