A quarter of small businesses feel ‘unsupported’ by their bank

According to official figures from the Bank of England, small business lending via overdrafts has fallen almost £8.5bn in four years

26% of UK small businesses feel their bank is unsupportive, according to research from Nucleus Commercial Finance and YouGov.

The survey of 500 small firms revealed that this figure rose to 30% when only businesses with a turnover of less than £1m were taken into account.

Respondents felt that financial lenders were particularly poor at communicating notice periods on business overdrafts with 40% claiming their banks had to give them at least a week’s notice or didn’t actually know what the notice period was.

The most popular overdraft notice period answer was three months or more than three months, with 14% of small firms and 19% of medium-sized businesses claiming their banks were obliged to give them at least three months’ notice.

Chirag Shah, CEO of Nucleus Commercial Finance, said:

“Unfortunately for small businesses, banks don’t need to give them any notice at all before removing their overdrafts – but they often don’t make this clear. Businesses work this source of unsecured funding into their budgets and rely on their overdrafts to plug working capital gaps on a month-by-month basis.”

According to official figures from the Bank of England, small business lending via overdrafts has fallen almost £8.5bn in four years.

Shah added: “Banks are simply reluctant to make this type of unsecured lending available. Basel III required them to acquire more capital to sustain the same level of risk, and small businesses are often their least profitable and therefore lowest priority business customers.”

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