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Scotland: SME access to finance eases

More than four out of five small businesses in Scotland are successfully applying for finance, latest figures from the Scottish Government indicate.

Its SME Access to Finance report found that 84 per cent of firms accessed all of the money they had applied for in 2012. This is up from comparable figures in 2009 and 2010, when 79 per cent of businesses secured their total original request for finance.

The Scottish Government said the figures suggested 'some evidence' of an ease in supply of bank lending to SMEs.

Demand for business finance has increased slightly since 2010, with 45 per cent of firms looking for credit over a three year period to 2012 compared to 43 per cent in the three years to 2010.

Although the latest figures point to a decrease in outright rejections by banks, the proportion of firms who secured none of the finance sought had marginally increased.

Finance secretary John Swinney said lending criteria had become stricter in recent years, but the figures suggested that access to finance was still possible.

This year, 9 per cent of firms sought new lending, with 32 per cent looking to renew existing agreements.

Overdrafts remained the most popular form of finance applied for, with nearly a third of firms applying for the facility. This was followed by credit cards and leasing/hire purchases both at 17 per cent, with only 12 per cent requesting loans. Loans exhibited a much higher rejection rate than other forms of finance.

Calling SMEs the 'lifeblood' of the Scottish economy, Swinney said: "Any evidence of increased lending to SMEs is good news for our economy and will be a key element in building a sustained recovery."

There are approximately 305,000 SMEs in Scotland - comprising 99 per cent of all businesses in the country and collectively employing over half of the total employees in Scotland's private sector.

Swinney encouraged businesses to make use of the Government's Business Gateway service to seek advice and information before approaching banks, in order to maximise their chances of a successful application. He added that a 'robust and commercially sound business proposition' was vital.