Business in the grip of 'credit apathy' says Chamber report

That is the result of new research from the British Chambers of Commerce, which found smaller firms are even less likely to apply for finance than the bigger ones as they hold back on plans to invest in their businesses.

Suren Thiru, head of economics at the British Chambers of Commerce (BCC), said: “Accessing finance remains crucial to the lifeblood of a business, yet a decade on from the financial crisis these results suggest that we have moved from a credit crunch to credit apathy where a lack of demand, rather than supply of finance is now the overriding issue.

"The weak demand for finance revealed in this survey is a key concern because it weighs on investment intentions and means that firms are treading water rather than going for growth, which is undermining the UK’s growth prospects.

“While businesses continue to report a reluctance to borrow in the current economic climate, discouraged demand remains a real phenomenon with businesses reluctant to approach banks to try and get finance because of the assumption that they will either be rejected or that they will have other facilities re-evaluated.

“The government also needs to do more to kick-start business investment. Firms need relief from the heavy burden of upfront costs, which sap funds that could otherwise be spent on big capital expansions. Give companies the financial room to grow and clarity on Brexit and we’d see more long-term investment coming through.”

Paul Kalinauckas, chief executive at Wolverhampton-based BCRS Business Loans and a member of the Black Country Chamber of Commerce, added: “Although there has been a boom in the number of alternative finance providers, entrepreneurs are spending too much time chasing finance when they need to be concentrating on running their businesses.

"We need to encourage viable businesses to go for growth with supportive lenders providing the right products and services to meet their needs.”