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High street tightens lending criteria for small businesses

  • 26/02/2002
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Small businesses are forced to shop around specialist lenders for funds

High street lenders are tightening up on commercial lending to small businesses, according to commercial broker ASC Partnership.

The intermediary, which has 80 commercial lenders on its panel, said small businesses are finding it increasingly difficult to take out a mortgage with high street lenders and are being forced to shop around specialist lenders in order to borrow funds.

Henry Ejdelbaum, managing director of ASC Partnership, said: ‘We specialise in commercial finance. Over the past few months there seems to be more anecdotal evidence that lenders are tightening up on commercial lending to small businesses. We have 28 offices around the country and are getting a lot of feedback saying lenders are more cautious in their approach to commercial business and are tightening up their criteria.’

The intermediary has found that even clients with existing relationships with lenders are finding it hard to get credit.

‘People are being turned down in the first instance by their local high street bank or building society that they have had a relationship with for their residential mortgage or business account for years. They are being turned down because they do not fit their strict criteria,’ said Ejdelbaum.

First National, the commercial lending arm of Abbey National, has not changed any criteria in recent months. Daniel Schraibman, spokesperson for First National, said the trend recorded by ASC Partnership could be related to the current economic climate.

‘It is fair to say conditions are different in certain sectors because of the economic downturn, such as printing and agriculture. We have not made any changes to our lending criteria and have not noticed any change in those turned down. In many areas of commercial lending, we are relatively new players, so other players in the market may be battering down the hatches more. However, as far as we can see, the outlook is still good.’


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