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Lending to SMEs is not improving

Nia Williams

April 5, 2013

The survey shows the overall availability of credit to the corporate sector supposedly increased in Q1. But that increase was confined to large companies, with small and medium-sized companies reported to have experienced little change in credit availability. Lenders expect overall credit availability to the corporate sector to be little changed in Q2 despite an anticipated increase in demand.

Commenting, Paul Aitken, CEO of borro, said: “Once again we are faced with figures showing the availability of credit for SMEs has not improved over the first quarter, as demand for lending has fallen significantly when it was expected to grow.

“This is most likely down to a continued lack of confidence amongst business owners due to the fragile economic climate, lingering distrust in the banks, and general low morale. It is a shame that the nation’s SMEs, that should be the life-blood of the British economy, are still being thwarted, despite numerous government initiatives to stimulate business growth.

“What we need is a boost in confidence, which in turn will lead to business owners seizing opportunities and even taking risks, resulting in the stimulation of growth.

“We have seen a huge increase in the number of small business owners unlocking finance from valuable and unusual personal assets in order to capitalise on business opportunities; the average loan value to small business owners, who currently represent over 60% of our client base, rose 41% last year, from £17,000 to £24,000. This continued growth is proof that non-traditional forms of financing are becoming more and more mainstream.”


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