Despite the government's attempts to boost business lending, nearly 60 per cent of UK companies were refused credit by their banks last year, leaving a fifth to turn to credit cards to finance their enterprises.
That's the main finding from an Institute of Directors (IOD) survey of more than 1,000 company directors, which goes against recent claims by lenders that they've been allocating finance to firms that need it.
Of the companies that were refused credit, 83 per cent were not offered information on the government's Enterprise Finance Scheme, which guarantees business loans between £1,000 and £1 million.
Another fifth of firms questioned did not even apply for bank loans because they either felt they would not get them or believed the costs involved would be too high.
"It seems that more businesses are turning to forms of unsecured finance, such as credit cards, to get them through their short-term spending needs," confirmed Miles Templeman, director-general of the IOD.
"The low interest rates on credit card balance transfers may partially explain the increasing use of this form of finance, but any contraction in credit card finance could see significant price hikes, adding to the already grave difficulties that many businesses are having accessing funds."
The British Bankers' Association has countered that the sample size of the survey is too small to draw any meaningful conclusions. 
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