6 minutes | Friday, 3 May 2019
Banks are still not lending to small businesses despite the overall recovery in UK bank lending – according to new research.
The latest report from small business loans platform Funding Circle and Oxford Economics, ‘The Big Business of Small Business’, highlights that while the value of new bank lending to large businesses increased by 43% between 2015 and 2018, it has decreased to SMEs by 3% - more than £1 billion per annum.
From 2011 to mid-2015, banks decreased the volume of lending to firms of all sizes. Since then, the loans they issue to large firms have recovered quite significantly, while those issued to SMEs have stagnated. When changes in bank overdrafts are considered, net lending to SMEs was in fact negative in 2018, at minus £95 million. This means that the banks collected more in repayments than they gave out in new loans and overdrafts to SMEs. At the same time, the number of UK bank branches fell by 37% between 2007 and 2017.
So is the future of finance for UK small businesses heading away from the banking sector?
To discuss the research further we were joined by Natasha Jones from Funding Circle.