More than one third of UK small and medium sized businesses have been declined a bank loan in the past three months, new research from business software and service provider Sage UK today revealed.

The Sage UK Omnibus surveyed 1,500 small and medium sized enterprises (SMEs) in May 2010. It found that 34 per cent of UK SMEs who attempted to borrow money from a bank had their loan application declined. The research also highlighted that 58 per cent of the businesses questioned did not feel they were given an attractive rate for their loan.

Robin Moore, product manager of Sage’s Small Business Division said: “The decision on a loan can make or break a firm, so it is a concern that so many SMEs that evidently believe they need the funds are being declined. There is a range of best-practice measures that entrepreneurs can adopt to increase their chances of getting the green light on a loan and our advice would be to put yourself in your bank’s shoes and think about what they would need from you.

“Producing a detailed business plan is paramount. It might feel like information overload, but by conducting and presenting research that proves why you need the funding, explains how much finance you need and how are you going to pay it back, you can address any concerns the bank may have before they arise. It is equally important to develop and provide a contingency plan with the best and worst case scenarios, as this illustrates to the loan provider that both you and your business are prepared for any eventuality.”

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