Banks reducing SME lending, brokers say

Its survey found that 77% of brokers said that high street banks are reducing their appetite to fund SMEs. The information was collated from more than 100 SME finance brokers who submitted over 2,500 finance applications for SMEs in March.

Just under 40% of brokers have seen an increase in applications for funding being rejected over the last quarter.

In more positive news, the most common reason for SME loan applications, according to over half of brokers, was to expand the business.

The data also showed that concern about recession had reduced. While 60% of brokers reported it as a concern, this was down from 77% in the fourth quarter last year.

Joanna Reynolds, managing director of Bordeaux & Burgundy, commented: “In uncertain times it’s more important than ever to give SMEs access to the financial support they need to hire, grow, and expand. Scale-up businesses need strong backing to move forward, especially with the cost of living crisis hitting workers hard.

“Having the funds available to invest in dedicated marketing campaigns and new business initiatives is the key to companies reaching their next stage of development. With industry leaders feeling cautiously optimistic about the year ahead, getting behind the next generation of entrepreneurs should be a top priority for banks."

Neh Thaker, co-founder of HedgeFlows, added: “SMEs make up the vast majority of UK businesses, so giving them access to funding and support to grow is critical for driving the economy forward. Business leaders have shown remarkable resilience in the face of surging inflation, high interest rates and the cost of living crisis, with the country set to swerve a recession, according to the latest data. If our SMEs thrive, we all benefit, in terms of job creation, skills and GDP, so lenders should be getting behind entrepreneurs and equipping them with the resources they need to expand internationally, invest in the latest talent, and move our economy forward.”