A recent study by the Federation for small businesses (FSB) shows lending to small businesses has hit an all-time low. New findings from the quarterly Small Business Index (SBI) show successful finance applications plummeting to lowest level on record.
The FSB warns that banks “pulling up the drawbridge” to small firms will further stifle economic growth. Fewer than one in ten (9%) small firms applied for finance in Q1 2022, the lowest proportion since SBI records began. The share that saw applications approved (43%) is also at a record low. Of the few firms that did manage to secure finance, four in ten (42%) plan to use credit to manage cashflow, considerably more than the numbers planning to use funds for equipment updates (21%), expansion (19%) or recruitment (4%).