Business van drivers: pumping up the economy but refused loans by the banks. What’s going on?
MOST business van drivers are being refused bank loans despite being a major contributor to the UK economy, according to a study by Mercedes-Benz Vans.
Nearly 60% are being turned away by high street banks when the sector contributes more than £43.8Bn to the economy.
Each van driver shells out more than £5,600 a year in fuel duty and road vehicle tax alone, more than a fifth of his or hers annual income, and even disregarding income tax and National Insurance payments.
While two thirds of small and medium sized businesses (SMEs) are expecting to grow within the next 12 months, a massive 58% are still seeing their applications for funding turned down by high street lenders.
The Bank of England has said that lending to SMEs under the government’s Funding for Lending scheme has fallen in 2014, with net lending decreasing by £2.7Bn in the first quarte, and specific SME lending falling by £723M.
The Bank of England believes lending to SMEs is more risky by its nature and requires higher capital to guard against bad loans. By contrast, figures from the bank’s industry body, the BBA, showed SMEs repaid £5.2Bn of existing loans in the first three months of 2014 and were holding £138.1Bn in cash – a 9% rise year-on-year and sign of strong economic recovery in this sector.
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