Bank lending terms stiffer in NI than UK average, says IoD

Over an NI Crunchtalk, Joanna Stuart of the Institute of Directors posts the results of a survey on the Bank Lending Conditions last month. It shows that over 50% of businesses in NI have found bank lending conditions more difficult since the turn of the year. This was an increase of 10% on the national picture, which probably reflects the fact that we are predominantly an SME economy. I ask: why is there “a lack of knowledge and almost no take-up of Government schemes?” We’ve been hearing this on and off for 30 years. Details below the fold.
The main findings were:
– Majority of companies are finding their banking facilities more expensive despite the B of E interest rate cuts
– Majority of companies have been able to renew or extend their current facilities
– Many companies are finding it difficult to get new loans particularly overdraft facilities
– This is a lack of knowledge and almost no take-up of Government schemes
– There is a great commitment by business owners / directors to keep business going
– 10% using personal finance
– 20% providing personal guarantees
– 60% of investments not being postponed due to lack of finance or confidence

The insolvency figures were also released today and these show an increase in the number of Bankruptcy Orders and Creditors Voluntary Liquidations in Q1 09 compared to Q4 08. I would expect to see these increase again in Q2 especially in light of the continued difficulties businesses are facing accessing finance.

We have now established a baseline to monitor against over the coming months, and we are meeting with the banks to see how we can address the challenges highlighted by businesses.

Former BBC journalist and manager in Belfast, Manchester and London, Editor Spolight; Political Editor BBC NI; Current Affairs Commissioning editor BBC Radio 4; Editor Political and Parliamentary Programmes, BBC Westminster; former London Editor Belfast Telegraph. Hon Senior Research Fellow, The Constitution Unit, Univ Coll. London