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56% of the country saw value of loans fall last year

56% of the country saw value of loans fall last year

Brexit is a key influence in the level of SME lending

Over half the country has seen lending to SMEs fall over the past year, with Birmingham suffering the most.

New research from specialist debt adviser, Hadrian’s Wall Capital (HWC), highlights a fall in 74 out of 132 postal areas of Great Britain in the value of outstanding loans. Figures also show a fall in SME bank lending in 2017.

Many cities in Britain’s former industrial and manufacturing hotspots saw the largest falls. These are the industries most often in need of finance.

Birmingham suffered the most with an 8% drop in the last year, followed by Oldham (7%) and Sheffield (6%).

Only three of the 132 areas studies – Newport, Warrington and Oxford – saw increases in lending of 5% or more last year.

Region Q1 2018 lending (£m) Q2 2018 lending (£m) Fall in lending in 2018 (£m) % fall
Birmingham £2,249 £2,060 -£189 -8%
Oldham £404 £376 -£28 -7%
Inverness £442 £412 -£30 -7%
Sheffield £1,261 £1,184 -£77 -6%
Manchester £1,556 £1,474 -£82 -5%
Crewe £516 £497 -£19 -4%
Glasgow £1,148 £1,108 -£40 -4%
Halifax £166 £160 -£6 -3%
Chester £570 £551 -£19 -3%
Brighton £1,144 £1,106 -£38 -3%
London £19,571 £19,214 -£37 -2%

Brexit woes

Banks have been particularly wary of lending to smaller businesses due to uncertainty around Brexit. Many lenders are concerned that a no-deal Brexit could result in a slowdown of the economy and impact on SMEs’ ability to pay back loans.

HWC says the fall in lending highlights the dangers for SMEs of relying on traditional bank loans for finance. The firm says it has seen a rise in requests for longer-term, fixed-rate loans it offers on the back of banks withdrawing lending from SMEs.

Marc Bajer, CEO of Hadrian’s Wall Capital, says: “Small businesses have spent the last ten years since the financial crisis struggling to secure finance and Brexit uncertainty is compounding this.

“Having access to finance over the long term can be very important for small businesses planning for the future. If they are unable to access finance to secure a deal or fund an expansion, that could be very detrimental to growth.

“Although banks are no longer able to provide long-term, fixed-rate lending, businesses should be aware of the finance options available from alternative providers.”

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