BoE data shows SME lending is still a big problem

New data show that accessing finance is still a big problem for SMEs despite the continued expansion of the alternative finance sector.

While the latest figures from the Bank of England reveal a deceleration in the decline of small business lending through the Funding for Lending scheme, SME funding still fell by £400 million in the second quarter. Furthermore, a new Credit Conditions survey from the Federation of Small Businesses claims that credit availability has fallen for SMEs, with over half of those companies questioned finding the availability of credit poor or very poor.

A new survey from OnePoll on behalf of Xero further highlights the degree to which maintaining cashflow remains a challenge for SMEs, with accessing funding and late payment identified as major obstacles to reinvestment and development.

The new data put the spotlight back on traditional lenders and their lending practices, and the attitude of SMEs towards them. Alternative finance services, from challenger banks to invoice finance and peer-to-peer lending, have been filling the gap in lending and are increasingly acting as a lifeline to small businesses that are either being frustrated by or are fed up with big banks.

However, as the news from the Bank of England, the Federation of Small Businesses and OnePoll underlines, there is still some way to go to meet SME lending demand. Given how the small business lending landscape has changed in recent years, it seems clear what sector will be playing a central role in driving SME growth going forward.

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