Louise Beaumont, an executive at GLI finance and vocal advocate of small business, says more needs to be done to support UK small business. Reflecting on the recent statement by the Bank of England and their credit numbers, Beaumont believes the slight increase in lending obscures a greater challenge;
“Although today’s figures from the Bank of England highlight a modest overall increase in lending to SMEs over the last 12 months, the figures mask the longer term problems that SMEs have faced. Since 2011, SMEs have had £5.7m withdrawn a day in small business overdrafts alone cutting available credit by a staggering £8.4bn, a drop of 40% in four years.”
The Bank of England reported that gross lending (excluding overdrafts) to non-financial businesses was £21.7 billion in January. Within this, gross lending to large businesses was £16.8 billion, whilst gross lending to SMEs was £4.9 billion. Repayments by non-financial businesses were £17.0 billion in January. Within this, repayments by large businesses were £12.4 billion, whilst repayments by SMEs were £4.6 billion. Net lending – defined as gross lending less repayments – to large businesses was £4.4 billion in January. Net lending to SMEs was £0.3 billion.
“Recent figures from the FSB also highlighted that fewer firms are even applying for finance now because they know that when they ask they are in danger of having their existing overdraft slashed or removed,” said Beaumont. “It is clear more needs to be done to create an environment in which SMEs can thrive in order to allow them access to the finance they need to grow as they are the lifeblood of the UK economy.”
Part of the challenge, is consumer awareness of the availability of non-bank finance.UK alternative finance grew by 84% to £3.2 Billion in 2015. While alternative forms of finance are growing rapidly in the UK, messaging takes time.
“A recent report produced by GLI Finance in conjunction with the University of Cambridge in November 2015 highlighted that raising awareness levels amongst SMEs of options available through alternative finance could add up to £20 billion to the UK economy by 2020. The UK Government has made important progress in raising the profile of alternative finance as a complementary force in the financial services landscape by implementing supportive legislation and regulation. It is now crucial that it continues to build on these initial successes by working closely with the industry and key stakeholders to ensure SMEs are more aware of the benefits of being able to access the right type of capital at the right time.”