Bank of England States Lending to SMEs Increases in February, GLI Says Not So Fast as Longer Term Problems are Concealed

The Bank of England has released the monthly statistics regarding lending and according to the BOE lending to non-financial SMEs grew by £0.7 billion compared to an average monthly increase of £0.2 billion over the previous 6 months. Certainly an improvement.  Louise Beaumont, an executive at GLI Finance cautioned on the data saying the number are overshadowing the truth;Louise Beaumont

“Despite today’s figures from the Bank of England highlighting that overall lending to SMEs grew in February, they conceal the longer term problems that SMEs have faced. Data from Funding Options highlighted that, since 2011, SMEs have had £5.7m withdrawn a day in small business overdrafts alone cutting available credit by a staggering £8.4bn, a drop of 40% in four years. Furthermore, the FSB highlighted earlier this year that fewer firms are even applying for finance now because they are concerned about having their existing overdraft removed, while a recent report from the British Chambers of Commerce showed that SMEs have very little understanding of the alternative finance options available to them.”

Beaumont believes that much more needs to be done in order to improve the environment where SMEs may thrive and grow.

“Our recent report produced in conjunction with the University of Cambridge in November 2015 highlighted just how valuable SMEs are to the UK economy,” states Beaumont. “According to  the report, raising awareness levels amongst SMEs of options available through alternative finance could add up to £20 billion to the UK economy by 2020.”

She agrees that the UK government has made significant progress in boosting alternative finance and improving the regulatory landscape but now is the time to do more;

“It is now crucial that the Government continues to build on this momentum by working closely with the industry and key stakeholders to ensure SMEs are aware of all their options for accessing finance.”

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