A new survey shows that 58% of small and medium- sized businesses who made an application for credit to their bank in the last three months had been refused. This compares with 54% in the previous quarter.
The latest ISME quarterly bank watch survey also shows that 64% of firms said that banks are making it more difficult for SMEs to access finance, while 37% of respondents had requested additional funding or new bank facilities during the last three months, up from 30% in the previous quarter.
It also shows that of the 42% of SMEs approved for funding, 63% have drawn down the money either in full or in part.
16% of companies surveyed also said that they had seen changes in their bank facilities during the most recent quarter. Of those, 30% had their overdraft reduced, 39% saw an increase in charges and 28% saw an increase in their interest rates.
A majority of companies - 93% - also stated that the Government was having either a negative or no impact on SME lending.
ISME says the survey results are at variance with the claims by the banks and the Credit Review Office that SMEs are reducing their demand for bank credit and are being used as an excuse for the banks not meeting their SME loan commitments.
'We need the Government to stop merely acknowledging that there is a problem with SME lending and do something about it,' commented ISME's chief executive Mark Fielding.
'This includes reforming the banking sector, making bankers accountable to the Government and ensuring that badly needed credit is made available to protect companies and employment,' he added.
However, in a statement this evening the Credit Review Office said it was very disappointed by the lack of support it receives from ISME. Both organisations have a remit to assist SMEs through these challenging times, it said.
The Credit Review Office's John Trethowan says he has reviewed the process and survey questions of the ISME survey and has concerns on how this research is being undertaken.
