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Investment body raps banks for not lending
Demand for loans from a Bradford investment body that supports businesses turned down by the banks is going through the roof.
Over the first six months of its financial year, Bradford Enterprise Fund has seen applications by small firms for loans between £1,000 and £100,000 grow by 22 per cent.
The body, a community development finance institution, only lends to entrepreneurs that have been turned down by banks.
It has a mission to lend £1 million this year and by the end of August had already lent £800,000.
BEF is working on plans to double the amount it can lend. It has submitted a bid under the European Regional Development Scheme under which it would be able to match loans from that scheme.
Stephen Waud, BEF fund director, said it was hoped to have the ERDS funding in place by January and it would be the first scheme of its kind in the UK. He said: “The beauty of the scheme is that it will involve no public funding from the UK government at a time when resources are tight. It will enable us to double what we can lend through matching the European funding, otherwise we may be faced with scaling down if demand continues at its current rate.”
Mr Waud said the Bank of England had reported that business lending by banks was down 2.2 per cent on last year, which was a bad year anyway.
He said: “Despite the Govern-ment’s stated intentions it is clear that it is having no effect on the banks’ policy. If the banks are reducing their supply of finance to business what hope is there for a business led recovery? The position of the banks is disappointing.”
Meanwhile, the Co-operative Bank has accused its rivals of abandoning and ‘closing the door’ on businesses wanting to borrow.
The bank, part of the group headed by Bradford-born chief executive Peter Marks, said it increased lending to business by 40 per cent in three years.
In a period when “many of its competitors firmly closed the door to companies wanting to borrow”, the Co-op said it had lifted business borrowing from £6.2 billion to £8.7 billion since 2007.