Many smaller companies are no longer seeking finance as they find the available options too limited and expensive, BCC said in a press release.

This comes as the business group gathers feedback from its extensive network of 53 chambers across the UK, representing thousands of businesses.

The evidence highlights that the current economic conditions are among the most challenging in recent memory. Rising interest rates have left an increasing number of companies concerned about the cost of borrowing. Furthermore, the BCC found that many businesses feel tied to their existing financial providers and are reluctant to explore other options.

The lack of competition, worsened by poor awareness of alternatives to traditional banking routes, is stalling progress. Unlocking alternative finance options, increasing the flexibility of funding and a comprehensive drive to increase awareness are all needed to shift the dial.

Jonny Haseldine, policy manager at the BCC, said: “Research has highlighted that in 2022 almost half of smaller firms (48 per cent) did not borrow any funds. But among those that are currently using finance, half are using more than pre-pandemic and becoming more concerned about their ability to pay. This is an especially acute issue after many firms were forced to take on much higher debt burdens during the pandemic in order to survive.

“The continuing tough economic conditions also mean many SMEs have a huge amount on their plates and don’t have the time or expertise to find the finance options that work for them. More needs to be done to help firms find the right solutions. We also need to see the British Business Bank given more resources, greater support for social enterprise lenders, and improved flexibility in funding criteria.”

Fibre2Fashion News Desk (DP)