The Federation of Small Businesses (FSB) has warned that UK economic growth is being 'restricted' by limited access to alternative finance options for small businesses.
Research carried out by the FSB revealed that just 13% of small firms are currently looking to apply for external finance. 68% of these businesses are being offered lending rates above 4%, according to the data.
Of the firms which applied for finance in the third quarter of 2018, 70% chose to utilise a bank loan or overdraft facility, according to the FSB. The business group warned that there is a 'lack of meaningful competition' within the small business banking sector, which is becoming a 'chronic issue'.
'Despite being a decade on from the crash, we still have this dangerous combination of weak appetite for, and low awareness of, alternative finance options, high borrowing costs and inadequate support for small firms that are turned down by banks,' said Mike Cherry, National Chairman of the FSB.
'Having real time access to accounts will make it easier for finance providers and investors to identify the right routes for clients and make decisions swiftly.'