Banks have blocked loan applications worth more than £153 million from ambitious East of England companies in just six months, it has been claimed.
According to new figures, mainstream banks have rejected numerous loan requests from companies desperate for funds that are vital to their growth and job creation.
Financially viable SMEs are being turned down for finance because they do not fit the often inflexible criteria applied by many banks.Max Chmyshuk, managing partner
The figures have been released by UK-based direct funding company Fleximize, of Ipswich, which says many mainstream banks are too inflexible in their approach to lending to businesses.
The statistics show that in Peterborough city applications for £5.93 million were rejected between January and June this year while for the rest of Cambridgeshire some £27.28 million was refused.
In Suffolk the value rejected over the same period totalled £28.31 million while in Norfolk it was £31.73 million and in Essex the figure came to £59.83 million.
Across the region there are 152,400 businesses registered for VAT and/or PAYE in East Anglia and Essex, making up around one in 20 of the total number in the UK.
But Fleximize points out that since 2008 the alternative finance sector has lent around £169.14 million to businesses in the region.
Max Chmyshuk, founder and managing partner at Fleximize, said: “East Anglia and Essex is a hive of business activity, and we estimate its GDP is around £172.89 billion a year.
“However, like any thriving economy, it needs access to credit to grow and our research also suggests that many financially viable small and medium sized firms in East Anglia and Essex are being turned down for finance because they do not fit the often inflexible criteria applied by many banks.
He added: “At Fleximize, we use more in-depth analysis of a company’s financial performance and its customer feedback on online trading platforms such as Amazon and eBay to determine whether or not we will lend.
“This has meant that we have lent to a number of financially viable companies which have previously been rejected by the banks.”
John Bridge, chief executive of Cambridgeshire Chamber of Commerce, said: “Businesses have complained that the mainstream banks tend to be too impersonal.
“Decisions on loan applications seem to be made by computer and there are no details or explanations about why a request has been turned down. In some cases the decisions are not even made in the UK.
He said: “Some banks are beginning to realise they are too impersonal and are bringing back local staff.
“There is a danger that economic growth could be stifled if banks do not lend to businesses but there are a number of alternative sources funding and it is why crowd-funding has become so popular.
Mr Bridge added: “But the figures hide the quality of the applications. Sometimes companies do not have a robust business case to support the application and then it is in the interests of the bank and the applicant that the request is refused.”