Small businesses borrowing costs are at their highest level since late 2009 hitting companies that are hoping to expand.
The average rate of interest paid on loans of under £1m has risen to 3.92 per cent.
Said, Gerald Irwin of Sutton Coldfield based Licensed Insolvency Practitioners and Business Advisers, Irwin Insolvency, “Rising costs of credit at a time when firms want to expand means small businesses are being forced to turn to alternative forms of funding to finance their investments such as leasing.
“Lending to small businesses has been a major focus for the government and they will undoubtedly be disappointed that despite all their efforts to reduce the cost of loans they have actually increased.
Project Merlin has failed to have any major impact on small business lending with the Enterprise Financial Guarantee scheme and quantitative easing measures fairing little better, the task now falls to the government, Bank of England and high street lenders to plot a course forward.
When all is said and done, the very survival of many small firms may depend upon new plans of credit easing being more successful in delivering the finance they require. Perhaps the National Loan Guarantee Scheme will fit the bill?