The banks’ convoluted financial mechanism continues to fail SMEs
Lending to small and medium-sized businesses (SMEs) fell in the first quarter of this year, according to figures just released by the Bank of England. Net lending, a measure that counts repaid loans, fell by £2.7 billion in the first quarter of 2014, with SMEs seeing lending fall by £723 million.
Nicola Horlick, CEO of Money&Co., said: “There’s been a reversal in negative net lending to UK business, but the recession isn’t over for everyone and the annual rate of lending growth remains negative. In the Bank of England’s own words, ‘conditions remain tight’ for small businesses.
“Access to finance is the litmus test of our economy’s ability to support growth. Unfortunately, the traditional financial establishment continues to starve SMEs of the funding they need. Today’s announcement by the Competition and Markets Authority into the competitiveness of UK high street banks will hopefully go some way to address this.
“TV adverts claimed banks were lending to SMEs, but the statistics are negative”
“Alternative finance, such as person-to-business (P2B) lending, is increasingly helping UK businesses to get the finance they need to grow but too few companies know about this option. Unlike the banks, which seem to be stifling growth, alternative finance has real potential to boost the UK economy. The government’s decision to open a consultation into new lending routes for SMEs will help boost awareness and understanding; more needs to be done to open up avenues for growth.”
“The litmus test for the Funding for Lending scheme has always been whether young and fast-growing businesses are able to get the finance they need to expand and drive the recovery, and unfortunately many of these firms remain frozen out of the market,” said John Longworth of the British Chambers of Commerce in a BBC report.
In her blog yesterday – “UK’s SME-led recovery needs our support” – Nicola Horlick said: “There has been a proliferation of TV adverts lately from the banks proclaiming that they are lending to small businesses, but the statistics show that the overall trend in business lending has been negative in every year since the recession began.”