Small businesses ‘may lack confidence in recession’

The Bank of England’s latest credit conditions survey may suggest a lack of financial confidence among small and medium businesses amid the recession, it has been suggested.

The National Federation of Enterprise Agencies (NFEA) was commenting on news from the Bank that demand for both secured and unsecured lending from small businesses declined over the past three months leading up to June.

George Derbyshire, chief executive of the NFEA, said such firms appeared to have confidence issues and that stories in the press relating to more rigorous scrutiny of loan proposals and the higher charges for borrowing may have damaged their confidence.

"Perhaps if businesses did approach banks they would get a better reception than they anticipated as banks are keen to support small businesses," he added.

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Indeed, according to the Federation of Small Businesses, the economic position such firms are in is starting to improve since a low point at the end of last year.