Business owners 'relying on credit cards'
22 February 2010 08:19:41
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| Credit cards are being used to finance businesses. |
Research conducted by the Institute of Directors (IOD) found that 57% of businesses were denied credit by banks in 2009.
The survey also showed that in 20% of cases where credit had been refused, business owners were forced to finance operations through the use of their own personal credit cards.
According to Miles Templeman, director general of the IOD, the practice of using credit cards to prop up businesses is particularly worrying at a time when fees and rates are on the rise.
"Any contraction in credit card finance could see significant price hikes, adding to the already grave difficulties that many businesses are having accessing funds," he commented.
However, the British Bankers' Association suggested the results of the survey should be treated with caution as the findings were based on a small sample size.
Meanwhile, Liberal Democrat shadow chancellor Vince Cable said the research showed "large numbers of small and medium-sized businesses are still having difficulty in getting credit on reasonable terms".
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