UK banks appear to be increasingly reluctant to lend to SMEs, with 67% of UK SMEs believing they are currently less willing to lend, with a turnover of between £1 million and £5 million. Among small and medium-sized enterprises in the pound, this has increased to 71%.
survey data from independent small business funders; Bibby Financial ServicesWe also found that 43% of UK SMEs believe their need for external funding is greater than they were six months ago. However, while almost half of UK small businesses need further support, more than half (54%) say they are finding it more difficult to access finance.
Among UK SMEs using external sources of funding, 42% also said their existing financial institution had reduced their available funding between March and September. According to BFS’s latest S.ME confidence tracker report.
Theo ChataBibby Financial Services’ Chief Financial Officer explained the significance of the findings. Mr Chatta said: “These findings are deeply worrying and will undoubtedly hinder the UK’s economic recovery and put further pressure on small and medium-sized businesses that are already under siege.” The data reflects a potential shift in the UK’s credit cycle amid a cost of doing business crisis not seen on this scale in recent decades.
“While banks are better capitalized today than they were during the financial crisis, a combination of economic conditions and regulatory and accounting initiatives appear to be driving stricter lending standards.
“This will have a significant impact on SME finance, both in terms of the level of funding that SMEs can access and the profile of businesses that banks are likely to lend to. If not addressed, this situation will worsen further. The number of bankruptcies is likely to increase further in the coming months. bank of england he warned. ”
Small businesses want solutions
With inflation rates continuing to rise over the past year and interest rates and energy costs remaining high, reduced access to financing has become an additional barrier for small businesses trying to keep their heads above water.
To improve the situation, 65 per cent of UK small and medium-sized businesses want greater tax benefits, and 57 per cent want the next government to improve access to loans and grants.
The findings are supported by the following data: BDRC’s Small Business Financial Monitor It found that the success rate for loan applications among small and medium-sized enterprises fell to 46% in the second quarter, down from 74% pre-COVID-19.
Despite the disappointing survey results, there remains optimism among small business owners and decision makers, with 63% expecting sales to increase in the coming months. Regarding the need for external funding, 38% require funding to manage day-to-day operations. Additionally, nearly half (49%) say they need funding to fuel growth and expansion.
Teo Chata added: “While traditional sources of financing for small and medium-sized businesses appear to be drying up, the reality is that there are more independent options available to small and medium-sized businesses than ever before. Gone are the days when banks needed to be the first and only point of contact for businesses looking for capital to grow.”
