Appetite for finance among small and medium-sized enterprises (SMEs) continued to fall in the second quarter, according to research.

It also showed that firms who did apply for new funds were less likely to be successful than those applying for a renewal of facilities.

The supply of finance for SMEs has become a politically charged issue with business lobby groups claiming banks are withholding funding, while lenders say a lack of demand is the problem.

The survey by BDRC Continental showed 43% of SMEs were currently using external finance, a decline of 8% points compared to the previous quarter.

Only 14% of SMEs thought it likely they would apply for new or renewed funding in the next three months, down slightly from 16% in the first quarter 2012.

In terms of available of finance 90% of loan and overdraft renewals were successful in the second quarter.

This compared to 73% of applications for new money from businesses that have borrowed in the past.

Amongst applicants for new money, those applying for their first ever loan or overdraft were much less likely to be successful with just 43% being offered finance.

Shiona Davies, Director at BDRC Continental, said future appetite for external finance remained muted - primarily due to the current economic environment.

"Our data shows that even special measures, such as the National Loan Guarantee Scheme (NLGS), may only appeal to a minority of SMEs, many of whom say they currently have no need for (more) external finance."

The NLGS was launched on in March 2012 and aims to help businesses access cheaper finance by reducing the cost of bank loans under the scheme by one percentage point.

The government claims the scheme has been successful, with over £2.5bn in cheaper loans being offered to over 16,000 thousand businesses so far.

Another attempt to get money flowing to businesses and households, the Funding for Lending scheme, was launched by the government in August, although it is too early to tell what impact it has had.

The BDRC survey is based on 5,000 telephone interviews with SMEs.

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