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SME funding to fall

The Bank of England have released statistics today which indicate the rate of lending to Small and medium enterprises has dropped dramatically and how much by.

Private business loans in the UK have been cut by £64 billion ($100 billion) due to the collapse of Lehman Brothers three years ago, says Syscap.

The Bank of England statistics showed the amount of loans outstanding to businesses is now £439 billion ($684 billion), down 13 per cent from a peak of £504 billion ($785.3 billion) in September 2008. After Lehman Brothers filed for bankruptcy on 15 September 2008, the availability of finance for businesses went into decline.

Although the Government promise SME’s they are doing all they can to solve this problem, there is little sign that this decline in lending, especially to SMEs, is at an end.

Philip White, Chief Executive of Syscap, says, “Three years on from the Lehman collapse and SMEs are still struggling to secure sensibly priced finance. All businesses have struggled to access bank credit since the credit crunch but SMEs have been hit the hardest. SMEs typically don’t have as many options to find alternative funding as larger businesses – very few are in a position to issue bonds or sell shares.”

Syscap believes that the Government could take some simple, practical action to increase the availability of lease finance to small businesses.

This is also a point we constantly raise at Select Factoring, about the range of funding available and actually how many people realise exactly what they could do to gain capital.

Leasing, a key source of SME financing, is currently excluded from the Government’s flagship small business lending scheme (Enterprise Finance Guarantee). The Government guarantee is designed to encourage banks to lend to businesses they might not have considered lending to.

White said, “Increase the amount of funding to small businesses by encouraging leasing and we will see more businesses make the important investments in IT and machinery that they need in order to stay competitive.”


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