Small business credit approvals hit 30-month low as rate decision looms

Press Releases 10 May 2018

Small firms are finding it increasingly difficult to access new finance, according to new research from the Federation of Small Businesses (FSB) published ahead of a Bank of England (BoE) interest rate decision today. 

The findings show that only six in ten (60%) small firms that apply for credit are successful. The quarterly figure is at its lowest since Q4 2015, and down considerably from the 74% recorded in Q2 2017.

The proportion of smaller firms describing the availability of new credit as ‘poor’ (40%) in Q2 2018 is at its highest for two years.

Meanwhile, only one in four say that credit is ‘affordable’ this quarter (25%), down compared to the same period last year (30%).

Almost two thirds (63%) of small firms successfully applying for credit are being offered interest rates of over 4%.

Just one in seven (14%) small firms are making credit applications this quarter, in-keeping with previous surveys. The vast majority (79%) are applying for traditional bank loans or overdraft facilities.

FSB National Chairman Mike Cherry said: “If the BoE holds fire on a rate rise today that will be welcome news for a lot of small firms. While most are preparing for a rate increase this year, credit affordability did drop off following November’s move. Higher rates are one more cost to worry about.

“There is also the indirect impact to consider. Small shops are already under significant pressure. If mortgage costs increase, that means yet another squeeze on consumer spend and yet another obstacle to getting customers through the door.

“Equally, personal and professional finances are closely intertwined for a lot of small business owners. More expensive personal debt can often mean less to invest professionally.

“Yes, rates will rise at some stage. But it needs to be at a pace that small firms can afford.”

Notes to editor

1) FSB surveyed 1,017 small businesses between 13 April and 27 April 2018.

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About FSB

As the UK’s largest business support group, FSB is the voice of the UK’s small businesses and the self-employed. Established over 40 years ago to help its members succeed in business, FSB is a non-profit making and non-party political organisation that’s led by its members, for its members. As the UK’s leading business campaigner, FSB is focused on delivering change which supports smaller businesses to grow and succeed.

FSB offers members a wide range of vital business services, including access to finance, business banking, legal advice and support along with a powerful voice in Government. Each year FSB also runs the UK’s Celebrating Small Business Awards. More information is available at You can follow us on twitter @fsb_policy and on Instagram @fsb_uk.