An interesting piece of research from the credit reference agency Graydon UK shows further evidence of perhaps the dramatic slow down in bank lending to businesses.
Graydon analysed the numbers of charges registered at Companies House over the past ten years and found that this had dropped by a staggering 46% between 2007 and 2010.
A company must inform Companies House if it has given collateral security to a finance provider to support lending with 14 days of the security being given. Graydon’s research is therefore a useful barometer of the level of new lending being given as most significant lending by banks (and other lenders) to businesses would have to be against security.
This further highlights that if the criteria is tough then a business seeking lending must make sure its case is all the stronger. Our experience has shown time and time again that being able to demonstrate strong financial control and management in the business is key to this. If the management regularly review and act upon detailed management information and have a full understanding of the financial position of the business this will show good governance to a lender. This coupled with realistic and well thought through business plans will at least increase the likelihood of a successful loan application.
