Despite market conditions, small businesses still borrowing

According to a study by Barclays Commercial Bank, one in six businesses are taking out long-term bank loans in order to fund growth.

The study found that since the beginning of the year, 16% of businesses with a turnover of more than £1m had taken out loans of £500,000 or more, an increase of 3% on the same period last year.

In addition the study revealed that 17% of businesses sampled had increased their loans over the past year, with a further 14% claiming they intended to do so.

Richard Roberts, SME market analysis director for Barclays Commercial Bank, said: “Overall, we have seen a slight increase in loan applications in recent months, in contrast to the trend in 2006/7, while application success rates for established SME customers remain at over 90%.

“The findings of the study indicate that established SMEs are borrowing to capitalise on business growth opportunities and are receiving the support from lenders to do so.

“These figures go against any suggestions that UK SMEs are experiencing limited growth potential and indicates confidence despite current market conditions. Many UK enterprises are in a relatively strong position to borrow.”