Getting funding in place for a business acquisition or the turnaround of a distressed business has always been one of the sticking points for business buyers. But since the recession struck, getting money out of the traditional lending routes has become harder than ever.
The latest figures from the Bank of England suggest that things aren't improving. The statistics published earlier this week showed that net lending to businesses and UK households was down by £1.8 billion, a reduction in the total stock of loans of 0.1 per cent.
The drop comes in spite of the increase in lending to the banks themselves. In fact, the Bank of England has provided £16.5 billion worth of cheap loans to the banks between last August and March this year through its Funding for Lending Scheme.
Unfortunately for business owners and buyers, this funding is struggling to find its way into the hands of business people in Britain. The first three months of the year alone have seen a £300 million reduction in lending, and businesses are thought to be harder hit than homeowners who have at least enjoyed a reduction in mortgage rates.
Frances O'Grady, general secretary of the TUC, is among the voices to have criticised the banks for failing to pass money on to businesses: “We need a properly resourced state investment bank that can provide the assistance firms need to grow and create jobs.”
John Longworth, director general of the British Chambers of Commerce, added: “Whatever the banks claim about lack of interest, the truth is it has become more difficult for those SMEs that need to find finance.”
For our part, we'd love to see the banks recognise the importance of lending and improve access to funding for businesses. But until this happens it looks like businesses are going to have to look for alternative sources of finance.
Read more about funding for acquisitions. 
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