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300 rejections a day for business lending applications

  • 26/10/2012
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300 rejections a day for business lending applications
Applications for business loans are being increasingly rejected by lenders, according to research by Cambridge & Counties Bank.

The bank, which launched earlier this year, found that 300 overdraft and loan applications submitted for small and medium sized enterprises were turned down every day, something which would equate to around 13 an hour.

The value of this business is estimated to be over £1.2bn each quarter, with 27,300 applications rejected in the first three months of the year.

Robert Sinclair, chief executive of the Association of Mortgage Intermediaries, told Mortgage Solutions that the report highlighted that brokers were finding it difficult to place cases in every area of the market,

“Anecdotally, from my discussions with brokers, there is an issue with banks’ lending in this market. But I don’t think it is sector specific, certain banks are choosing to target specific parts of the market.

“I would just hope the Funding for Lending scheme would mean more money available for all parts of the market as the more funding out there the better.

“Regarding the commercial side of the market, the challenge for mortgage brokers is how much they understand the area. I would estimate that of 10,000 residential mortgage brokers in the market only 500-600 would also be doing a lot of work in the commercial sector.

“That would also apply to commercial brokers; I don’t think a lot of them are active in the residential market. But that’s the way it should be, brokers should specialise in one area.”

Gary Wilkinson, chief executive of Cambridge & Counties Bank, commented: “The UK relies heavily on the SME sector which is essential in leading our economic recovery.

“To grow and be successful, a large number of organisations are looking to raise capital, but it has become harder to raise funds from the big banks.”

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