I don't think this is a surprise to anyone in the small business world, with the probable exception of the people within the banks.
There are, in my opinion, very simple reasons for this.
- the banks have become far more risk adverse (they've had to bearing in mind their past) but have taken it too far.
- Risk adverse means more paperwork and longer decision making times.
- Small businesses have gone the opposite way. They move fast to resolve the needs of their clients and they expect their suppliers to do the same thing.
I once spoke to a bank who wanted to arrange a meeting in order to discuss whether it made sense for them to attend a morning networking meeting!
Anyone sensible would have gone: "I'll go to the meeting. If it's crap, I won't go again"
While bank lending to the capital’s small and medium-sized enterprises (SMEs) has plummeted 40 per cent in the space of just a year, companies based in London raised an estimated £350 million through peer-to-peer lending in 2015. Figures released by the British Bankers’ Association show that the value of all newly approved loans and overdrafts to London SMEs in Q3 of 2015 was down 40 per cent on 2014 totals, from £1.7 billion to just over £1 billion. The average London SME has now less than £20,000 borrowed from their bank – a record low. In 2011 the average London business had £28,000 borrowed from their bank.