A record number of small and medium-size firms are suffering from banks' tight grip on lending, according to a report released Thursday by the Ministry of International Trade and Industry.The financial institutions are reluctant to lend because they are struggling to sustain their capital-adequacy ratios to survive the ongoing financial crisis, the report said.A total of 4,345 small firms and 1,227 midsize and big businesses were polled in the September survey. Thirty-four percent of the smaller firms said they were suffering from the credit crunch, the highest figure since the start of the bimonthly survey in September 1997. Midsize and large companies complaining about tight lending increased to 19.2 percent from the 18.7 percent registered in the last survey, taken in July.Given the opaque business conditions and concerns that banks would deal negatively with lending as developments in the Diet's financial stabilization legislation unfold, the majority of the firms said the situation would deteriorate further.While many large companies complained about an increase in interest rates, smaller firms said they had difficulty in borrowing the amount of money they needed.
