Experience of banks has been cited as a major reason why small and medium businesses are being deterred from seeking finance from them, according to a new survey. The survey by research firm BDRC Continental for the British Bankers’ Association found that more than 1m companies were being put off from borrowing money. While around half pointed to the economy, 25% blamed the lending terms from banks. The number of companies that wanted to borrow in the past year but didn’t do so for a variety of reasons fell from 13% in Q1 and Q2 and 12% at Q3. Overall, 2% of all businesses were unsuccessful with an overdraft application and 1% were unsuccessful with a loan application. Nearly one third (31%) of loan applications were unsuccessful, but among those applying for a new loan, the figure was 41%. The survey, of 10,118 firms with turnover up to £25m, found that 74% hadn’t felt the need to seek a loan or overdraft in the previous 12 month, while 33% are completely “disengaged” from borrowing and are happy to be so. Shiona Davies, director at BDRC Continental, said: “This latest research shows that demand and predicted future demand for SME finance remain low, and that the current economic climate is clearly affecting SMEs’ appetite for external funding. Most of those that do apply are successful. “However, now that we have more interviews to analyse, we can see the challenges faced by first time applicants in particular.”