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More than one in five (21 per cent) - equivalent to around a million – of the UK’s small and medium-sized businesses (SMEs) have seen the lending terms from their bank worsen in the past five years, according to new research.

More than two fifths (nine per cent) of  SMEs affected have had the interest rate on their overdraft facility increased while a third have had their access to additional finance restricted and a quarter have had their lending restructured.

A nationwide study by peer-to-business lending group showed that in the last five years, more than one in six (16 per cent) SMEs have approached their bank to arrange or increase their company’s lending facilities. However more than one in ten didn’t approach their bank at all because they did not believe they would succeed in getting a loan.

SME overdraft use across the UK stood at £11.9 billion in the third quarter of 2013, up from £11.2 billion in the previous quarter.

The research showed that of those SMEs that did apply for a loan, nearly a third (31%) were refused. The main reason for the refusal was that the bank would not agree to the amount requested (21%).

However one in ten SMEs claim that they were turned down a loan but were not give a reason – this is despite the fact that just 1% of SMEs claim to have ever defaulted on a loan. The average amount that SMEs attempted to borrow was £26,333.

Via the website entrepreneurs and businesses across the country can loan money to other SMEs. Its loans can be repaid at any time for no additional charge and cannot be recalled by

Daniel Rajkumar, Managing Director, said: “Small businesses need all certainty in their finances as they look to grow, instead of worrying about their lending facilities being adjusted. Our research shows the disparity between those that have defaulted versus those whose facilities have been adjusted or withdrawn.” enables firms with at least two years of trading history to source growth capital from lenders looking for strong investment returns while providing business mentorship. It currently has around 350 active online lenders who have offered a total of around £1.5 million to British businesses. Lenders provide funding to SMEs on their own terms and as has lower overheads than banks and building societies, borrowers can refinance expensive bank products like overdrafts, while lenders make a bigger return compared to traditional savings accounts.

The research also showed that 2% (or around 100,000) of SMEs have been charged as a result of early repayment on a loan. With there are no early repayment charges for borrowers and no limit on the number of loans that can be facilitated through