Small businesses are still reluctant to borrow money, according to figures released today by the SME Finance Monitor.
Whilst borrowing remained basically static in the last quarter, the number of companies undertaking financial planning associated with borrowing fell by 10 points to 49%.
The Forum for Private Business (FPB) say that a decrease in demand for traditional finance could point to signs of a protracted economy.
Phil Orford, chief executive of the FPB, said:
“More businesses are looking to grow and fewer perceive a need to inject personal funds into their business. However, this is yet to translate into any significant increase in demand for finance.
“A solid recovery will be built on investment and a better trade balance in favour of exporting.”
The FPB’s concerns are based on the fact that business costs are still very high, reducing available profits that could be reinvested.
Despite these concerns, the survey also showed that the number of businesses who see the current economic climate as a significant obstacle to running their business in the next 12 months fell by 5 points to 21%.
The FPB say that most applications to banks for finance are successful and that small businesses should not be discouraged from pursuing this option for growth.