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BRC – increase lending to businesses

BRC – increase lending to businesses

Category: Business

Updated: 31/07/2009
First Published: 31/07/2009

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

In its Quarterly Credit Conditions Monitor, the body has revealed that a third of small and medium-sized (SME) retailers and almost a fifth of large retailers have seen a reduction in available bank lending during the last three months.

Of those who reported a reduction, over two thirds of SME said it has undermined their ability to trade, with six in ten having to lay off staff as a result. Three quarters of larger retailers reported they had reduced stock levels.

The BRC also reported that, despite the Bank of England's decision to cut the base rate of interest to an all time low of 0.5 per cent five months ago, just under half of SMEs have actually seen the cost of bank lending increase.

In addition, more than half of large retailers said the reduction or withdrawal of trade credit insurance had hurt their business, with 75 per cent of those affected reporting problems with their suppliers.

"As the Government launches its employment schemes, it's outrageous that some retailers are being forced to let staff go because of a lack of affordable credit," said Jane Milne, BRC business environment director.

"The poor availability of bank credit is undermining stock levels and retail employment. We understand that banks' current cautious approach to lending, but there's no reason why they need to stop loans to fundamentally sound businesses.

"I'm shocked to hear that over forty per cent of SME retailers said banks had increased the cost of lending in the last three months. We should all be doing our bit to help speed up the recovery. How can these increased charges be justified?"

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