Borrowers Keep Faith in Bankers Despite Elusive, Costly Nature of Bank Debt

In spite of a call from Alistair Darlings for banks to better their lending services, 55 percent of mid-market businesses still report that they are experiencing trouble getting credit and that the process is often a long one. While credit is expected to become easier to obtain in the coming year from a select group of lenders, 46 percent of borrowers remain unconvinced that it will become easier or less costly for them to obtain the financing they need.

These figures were announced as part of the findings from a survey of senior financial decision makers at UK companies whose task it is to work with the banks. The survey was conducted by BDO Stoy Hayward, a firm of business advisors and accountants.

Overall, the survey found that borrowers still retain some faith in the banks they work with, though a full 67 percent of companies reported that their opinion of banks has lessened during the course of the previous year. Of those surveyed, 85 percent stated their company experienced no change with their own bank and 62 percent claimed their bank understands the evolving needs of their business.

The cost of bank debt and the ability to obtain it continues to be an issue for any businesses which makes it something of an obstacle to total economic recovery. Even those state-owned banks with lending commitments have not managed to make much of an impact thus far. Though banks will find themselves increasingly interested in lended to solid businesses, due to the low levels of competition they will not have to undercut one another in terms of pricing for some time to come.

Nearly half of those companies surveyed reported they were seeking out alternative funding sources, including asset based lending, in the coming year. Nearly 85 percent have said they currently use an independent advisor to help them obtain financing and are generally experiencing positive results.