UK could be on the verge of an investment renaissance, but more needs to be done to get companies interested in using external finance again.

That’s the verdict of EEF, the manufacturers’ organisation representing 6,000 firms nationwide and in Kent.

Its latest Credit Conditions Survey for the third quarter of 2013 shows an improvement in finance conditions for small and medium enterprises (SMEs). The concern now is to get more companies interested in accessing finance at all after a bruising few years of rocky relationships with finance providers.

Among its key findings, EEF’s Credit Conditions survey shows that most firms saw the cost of credit fall, and a rise in availability. But a majority of firms report no need to borrow, suggesting the many are not using external finance.

Asked why manufacturers were dissuaded from approaching their bank for finance over the past four years, 19% said either the bank implied they would be unsuccessful or their previous experiences applying for finance put them off.

The EEF is urging the Government to launch a review of what more can be done to stimulate private competition in SME banking.

Andrew Johnson, EEF senior economist, said: “Our survey suggests that Funding for Lending may be at last helping SMEs get credit on the right terms. Smaller firms are reporting a big improvement in the availability of new lines of borrowing and more of them are seeing a fall in the cost of new lines of borrowing,

“With stronger growth and a more positive outlook, the prospects for an investment recovery look better. But to get these investment plans over the line, we must get more companies using external finance again. We need a more dynamic and diverse funding environment where providers are competing hard to offer firms great deals to finance their investment.”