According to Gyimah, businesses are at a major disadvantage compared to consumers when it comes to getting a loan. He notes that banks often refuse to lend to a small business that have their main accounts with another bank. While that makes sense for the bank, it leaves the business much less able to shop around for loans, look for a better deal, or find a lender if its own bank turns it down.

That's a particular problem given banks are getting tougher with loans: a recent study found that the majority (60%) of businesses looking for finance this year are not confident about getting approval. That's double the figure of one year ago.

Gyimah says despite the market failings, "bashing the banks" is not the answer. He's launching a consultation with the Daily Telegraph to find new ways to boost small business lending, pointing to the example of existing government schemes that provide guarantees for loans to growing]]> Fri, 15 Jul 2011 18:37:00 GMT http://www.uk-loan-pages.co.uk/articles/major-banks-get-competition-in-business-loan-market.html The Bank of England has revealed that lending to small businesses has dropped for five straight months. It's led to claims that the major High Street banks could find themselves losing out to new lenders in the market.

The Federation of Small Business says there is demand for £55 billion a year from small firms, the vast majority of it being used simply to get through the overall business slowdown. That's led to an influx of new lenders to challenge the big names.

As well as newly formed banks specializing in business loans, there are a growing number of investment companies such as hedge funds offering cash to small firms.

The market gap is partly down to the legacy of the credit crunch banking crisis. Major banks must stick to tough rules about how much cash they keep in reserve in comparison to the loans they give out, a result of the problems when too many loans ultimately linked to mortgage repayments proved less reliable than originally believed.

There's some dispute over exactly how likely major banks are to lend to small businesses. The British Bankers Association says only 15% of business loan applications are rejected. The FSB says this doesn't account for]]> Fri, 22 Oct 2010 15:18:00 GMT