Commercial lending picks up in small business sector, says Lloyds TSB

Fri, 24 Aug 2007

The majority of small businesses are accessing finance through structured loans, business credit cards or loans with fixed or variable interest rates, according to a high street bank.

Lloyds TSB head of communication Stephen Pegge said the majority of small business lending is conducted "entirely commercially", with limited government involvement.

In the past, many small business owners used an overdraft to start their enterprise, but nowadays more are opting for loans supplied by high street banks .

Mr Pegge said there is now "a much broader range of products and services available" to those starting their own business.

"There are business credit cards now which are available for working capital . Leasing and supply of finance is becoming a bit of a feature in the market too," he explained.

The Small Firms Loan Guarantee, designed to help small firms without assets to offer as security to obtain finance, only makes up a "small proportion" of the market, according to Mr Pegge.

Financing of smaller firms differs from that supplied to larger companies in that they are likely to have a more urgent need for funding, he added.

Small businesses are likely to require a "quick decision", Mr Pegge said, as they "often don't have the time to spend on long, complicated processes".

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