Fewer small and medium-sized businesses (SMEs) in the UK sought to borrow money during the first quarter of this year, according to latest figures from the market research consultancy, BDRC.
Just 39% of companies said they had applied for external credit during the first three months of 2013, with applications for 'core' banking products such as credit cards, loans and overdrafts, falling by 8% between quarter one in 2012 and the same period this year.
Around 63% of SMEs stated that they were reluctant to borrow money in the current economic climate, choosing instead to pay off existing debts.
Additional data released yesterday by the Bank of England (BoE) showed lending to businesses had dropped for the fourth successive quarter during the first three months of 2013, despite low interest rates being offered by lenders via the Government's Funding for Lending Scheme.
Commenting on the BoE's findings, Matthew Fell, director for competitive markets at the Confederation of British Industry, said: "Funding for Lending is reducing the cost of finance for businesses and households, despite disappointing lending figures overall.
"There are substantial headwinds hampering lending, including a lack of confidence amongst businesses and deleveraging by banks.
"The banks are clear that their ability to lend has been improved by the scheme, and more small businesses are seeking finance as a result," he added.
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