Banks tighten screw on business lending

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It is a further blow to troubled companies and start-ups struggling to raise funds. Although banks insist they are maintaining lending levels, that's not the case, says Adam Tyler, chief executive of the National Association of Commercial Finance Brokers.

Lending was already down in the period to July. An NACFB survey found commercial lending was 19% lower than in 2007, with businesses able to borrow only £15 billion against £19 billion for mortgages, bridging loans and leasing finance the previous year.

"Since then things have got a lot worse," said Tyler. "In the six months since July, lending has slumped to between £2 billion and £3 billion, more than 50% down on last year.

"Next year, we're forecasting that lending completed through our members will be about £5.5 billion."

Where repayment rates used to be 0.99% over Bank Rate, they're now 3% or more, says Richard Wheeler of Windsor Place Corporate Management.