SME Local Lending Figures Published
British Banking Association publishes figures on SME lending by postcode…
The BBA has published data showing the extent of borrowing, and also saving, to small and medium-sized buinesses (SMEs), broken down into postcode areas.
Data, collected from Britain’s high street banks, shows that there are certain parts of the country where businesses are more inclined to borrow money than bank it, and vice versa.
The net depositors, those regions where businesses deposit more than they borrow according to the BBA data, are London, the South East, East and North East of England, the East Midlands, Yorkshire & Humberside, the North West and Scotland.
Regions that need business finance most are actually getting more funding, according to the BBA data – outside London, the South East and the East of England, the regions are getting a proportionately higher rate of lending.
The South West of England represents 5% of UK SME business activity but accounts for 11% of business lending. Wales makes up 2% of the UK’s business activity but receives 5% of SME lending and the North West of England accounts for 8% of business activity but attracts 11% of the lending.
Published at the behest of the Business Finance Taskforce the data from the BBA is part of a drive for greater transparency. By making the figures more readily available it is hoped that Government, businesses and financiers will have a better understanding of the country’s financial landscape.
The result of the new levels of transparency should lead to better-informed policy decisions with The Treasury believing smaller lenders will be able to identify gaps in the market. Danny Alexander, Chief Secretary to the Treasury, called the move a "major step forward".
One advantage of the figures has been to highlight the fact that businesses are more prepared to pay down their debts and build up cash reserves.
Commenting on the data, BBA Chief Executive Anthony Browne said that the news showed British banks’ commitment to lend to small businesses and that those businesses who had been declined were receiving access to alternative finance providers. Browne also added that the banks were involved in the UK system of business mentors to help businesses – mentorsme.
Darren Westlake, co-founder of Crowdcube, the world’s first equity crowdfunding firm, said of the figures released:
“The publishing of local lending data simply highlights the failure of the Funding for Lending Scheme to make any real impact on financing start-ups and early-stage small businesses.”
Westlake added that transparency was vital for the banking system to regain public trust but said that publishing figures changed nothing, criticising the banking system as being "outdated" and blaming them for their continued failure to support and fund businesses:
“The latest statistics are just a smoke screen for a lack of real action on the banks’ part. And even when the banks do offer to lend, the interest rates and other terms and conditions are crippling so the offer is pretty useless, apart from adding to the banks’ own statistics that is. It’s no wonder more businesses are finding funds through alternative finance sources such as ours.”
The BBA data is available for further scrutiny at the Geographical spread of SME borrowing (23rd July 2013)