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In 2007, 90% of small businesses that applied for banking loans were successful in their application. About a year ago, that figure had dropped to around 65%, showing that it has been much tougher to get credit since the financial crisis just a few short years ago.

These figures are from the UK Office for National Statistics, which also found that fast-growing businesses were largely sceptical about how willing banks were to lend. 15 times as many people thought that banks were reluctant to lend compared with people who thought that things were starting to get better.

One of the concerns about these figures is that it is stopping small and medium businesses getting crucial banking loans that would enable them to develop and take on more staff, providing some much needed jobs for the UK.

The argument from many of the banks is that demand for small business loans has actually fallen since the financial crash, although this contradicts somewhat with the ONS survey into small and medium enterprises. This found that between 2007 and 2010, demand for banking loans actually went up.

42% of businesses tried to get finance in 2010. This is significantly higher than the 35% that went after loans just three years earlier in 2007. According to the statistics office Eurostat, the UK is one of the hardest places in Europe in which to get finance for small businesses. Insufficient collateral is a common reason given for rejected banking loans.

So what can small businesses do if they have been rejected for a loan but require finance? Depending on the work that they do and the state of their finances, they may have several options that they could consider. For example, one option to look at could be to consider factoring, while purchase order financing or contract financing could well help businesses looking to carry out various types of contracted work.

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