Small business lending at two year high

29 - 07 - 2013

Lending to small and medium-sized businesses (SMEs) between May and June of this year grew at the fastest pace since records began in April 2011, according to the latest figures from the Bank of England.

The figures show that lending increased by £238m between May and June, compared with the average monthly fall of £500m over the previous six months.

This rise in lending means that SMEs borrowed £170.4bn in June.
A SME is any business which has a turnover of less than £25m a year.
Lending to both small and large businesses has been falling since June 2009. Larger businesses continued to suffer a decrease in lending on both a monthly and yearly basis.

‘Obviously welcome’

In response to the latest figures, the Bank of England said the rise was ‘obviously welcome’ but warned against reading too much into one month’s figures.

Lending to SMEs is down 3.3% when compared with the same time last year.

‘Fuels hope’

Chief UK and European economist at IHS Global Insight, Howard Archer, welcomed the latest figures.

‘The rise fuels hopes that banks are now becoming more prepared to lend to small businesses,’ he said.

Mr Archer surmised that the government’s Funding for Lending Scheme (FLS) may have contributed to the rise in lending.

‘The Funding for Lending Scheme could be starting to have more of a positive impact,’ he said.

The FLS, which has been extended to 24 April 2013, allows banks and building societies to borrow money cheaply from the Bank of England, on the basis that they lend it to businesses and individuals.







Foremans LLP Umberlla
Foremans LLP