Demand for credit from small and medium-sized businesses (SMEs) remained low during the first three months of this year, despite an increase in the overall level of credit available, according to figures released by the Bank of England (BoE).
In its Credit Conditions Survey, the Bank found that many small businesses had been deterred from borrowing because they believed lenders were unwilling to lend, whilst lower capital investment and a lack of confidence in the economic markets had also contributed to low demand.
Loan performance figures revealed a sharp decline in the number of small businesses defaulting on their credit, suggesting that focus is being applied to paying off existing debts as opposed to seeking further credit.
The increase in available credit was reported to have been limited to large companies for the second consecutive month and is expected to increase further over the course of the second quarter of this year, particularly as a result of the Funding for Lending Scheme which was cited as a primary factor in bringing down funding costs for lending.
Availability of credit within the commercial property sector remained unchanged during quarter one of 2013 and is forecast to remain this way over the forthcoming three months, with property prices also remaining the same.
Previous reports from the BoE had suggested that commercial property prices had reduced the availability of credit.
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