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Bank lending to UK businesses remains weak

The Bank of England has confirmed that Bank lending to UK businesses continues to remain weak although there has been a sharp decline in the number of bad loans which were written off by the UK banking sector. However, even those UK businesses which have managed to obtain finance in these most testing of times have been paying very different rates!

The general trend would appear to show that small businesses in the UK are paying almost 1 percentage point more than their larger counterparts, which can have a significant impact upon cash flow and company debt. As a consequence, the UK small business arena is set to struggle for some time to come and indeed a number of business associations around the UK have warned the government of the impending danger.

In many ways the UK banking arena is in a no-win situation because ultimately the UK government is looking to reduce the risks taken by UK banks while at the same time asking them to fund potentially dangerous enterprises. That's not to say that the vast majority of small businesses applying for credit are not worthy of this credit just the fact that the UK economy could well slip back in the short to medium term which would place more pressure on even the most well-funded of operations.

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