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23 January 2012

Lending hit by funding costs

Difficult conditions in the wholesale funding market are putting upward pressure on the rates companies are being charged to borrow money, according to the latest report into lending by the Bank of England.

The stock of lending to businesses rose by just £400,000 in the three months to November and was down year-on-year, according to the Bank’s report, published on Friday. Muted lending to small and medium-sized companies was a major factor behind this.

Most major UK lenders that the bank spoke to reported that higher wholesale bank funding costs were having an effect on loan pricing for corporate customers. There was also an expectation that wholesale funding costs would not come down until the eurozone crisis was resolved and there was greater clarity on some regularity issues.

Howard Archer, chief UK and European economist at HIS Global Insight, said: “The persistent difficulties of small business to obtain funding at a reasonable price is a major concern regarding growth.


Source: Financial Times 21.01.2012

If you are faced with persistent pressure on your cash flow commitments we can help.


We have channels to available funds but more importantly there are more ways than bank lending to finance working capital or asset purchase.


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*Article for guidance only. Professional advice should be obtained to ensure that all circumstances are assessed in providing a complete answer.