According to a survey of more than 1,000 UK small business owners, one in four firms using or considering finance had an application declined in the past six months. Almost one in three had a credit line cut by a lender. The survey was published on 5 October.
01What the survey found
The figures come from the latest SME Confidence Tracker by Bibby Financial Services, an invoice finance provider. Among firms using or considering finance:
- Declined: 25% had a funding application turned down in the past six months.
- Credit lines cut: 32% had credit lines reduced by lenders over the same period.
The survey also points to slower payments. According to Bibby, 60% of small firms say customers take longer to pay than a year ago. On average, they are owed £72,000 in unpaid invoices.
Some are passing the pressure on. Bibby says 40% have cut the payment terms they give their own customers.
02Why lenders are cutting credit lines
Slow payments and a credit line cut often arrive together. When customers pay late, a business spends longer overdrawn, and its bank may see more risk at the next review.
A cut is one lender's decision. Other lenders assess the same business in different ways, and some specialise in funding unpaid invoices.
03If your credit line has been cut
Start with a cash flow forecast for the next 13 weeks. It shows how much the cut leaves you short, and when.
Then talk to your bank about timing, and line up a replacement before the new limit applies. Our guide to what to do when your bank cuts your overdraft sets out a 30-day plan and four ways to replace the money.
If you want a second view on what fits, our business growth finance team can look at it with you.
