Small businesses struggle for funding.

The Federation of Small Businesses, a lobby group, said a survey of members found that successful applications for bank loans and other financing had dropped «precipitously». Less than half of applications were successful in the third quarter of 2022, compared with nearly two in three before Covid-19, said the FSB in a report. The lobby group found the smaller a business was; the less likely its request for a bank loan was to be approved. Interest rates on loans offered to small companies have been rising as the Bank of England tightens policy in response to high inflation.

Nearly a third of small businesses that applied for finance in the third quarter was offered an interest rate of 10 per cent or more. «As a country, we cannot afford to have a repeat of the post-crisis credit crunch scenario, where the dreams of thousands of entrepreneurs and business owners were crushed by a withdrawal of finance options, leaving them unable to continue and deepening the UK’s economic woes,» said Martin McTague, FSB national chair. The FSB raised concerns that lenders could withdraw from the small business lending market, as happened after the 2007 financial crisis. The FSB said the Business Banking Resolution Service, a non-profit organisation helping small companies resolve disputes with banks, needs more time to clear its backlog and asked for other state-backed schemes to be opened to small businesses, such as the Seed Enterprise Investment Scheme.

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Cloud Bookkeeping

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