LENDING to businesses fell again in July, figures from the British Bankers' Association reveal.
The BBA reported a drop of about £500 million in outstanding lending to non-financial businesses in July, to £297.1 billion, after a £4.2bn fall in June.
The July fall was just ahead of the start on August 1 of the UK Government and Bank of England's £80bn Funding for Lending scheme. This offers funding to banks at below-market rates, with financial incentives to encourage them to lend.
Debate continues over why business lending keeps on falling. The BBA said: "Borrowing levels for companies continue to contract as firms seek to reduce debt or wait for better and more certain trading conditions."
Stephen Pegge, director of SME (small and medium-sized enterprise markets) at Lloyds TSB Commercial, declared: "UK businesses are continuing to wait for better trading conditions before taking on further debt to invest. Our net lending is growing, but ongoing uncertainty means there is still a general reluctance to borrow and, as a result, many may be missing out on crucial opportunities for growth.
"Businesses - cannot afford to stand still. If their future growth is to be secured, firms need to grasp investment opportunities now."
But Colin Borland, at the Federation of Small Businesses in Scotland, said: "The crucial thing is there are still too many good businesses who do have a project or an idea, who are seeing those projects frustrated because they can't get access to finance - The reason we are not bubbling with confidence – part of it is down to the finance guys."
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