Business lending falls - commercial mortgages

05 January 2009

The level of lending to businesses has declined over the past three months, it has been revealed.

Financial institutions have reported that the reduction in corporate lending was larger than previously expected, the Bank of England's Credit Conditions survey stated.

Credit availability has been tightened, with a larger-than-anticipated fall in the availability of finance for the commercial real estate sector.

Lenders attributed this drop to the economic outlook and said that credit was set to become less available over the coming months - something that could have implications for those with commercial mortgages.

The financial organisations also reported that they had lowered the amount of unsecured lending they were prepared to offer to small businesses over the past three months.

It comes after Liberal Democrat leader Nick Clegg sent representatives to see first-hand how businesses are coping with the economic downturn.

He commented: "Small businesses are the lifeblood of our economy. It is clear that the government must be more innovative in providing support to suffering firms."