Overdraft lending to small and medium-sized enterprises (SMEs) has fallen by 37% in five years, according to Funding Options.

The peer to peer funder stated that the value of overdrafts to SMEs fell to £12bn (€14.1bn) over the past five years, as those for large businesses rose 25% over the same period.

Go deeper with GlobalData

Premium Insights

The gold standard of business intelligence.

Find out more

According to the findings, overdraft lending to large businesses is now twice the value of that to SMEs, at £24bn.

Funding Options said that the shift towards large businesses is due to changes in bank capital requirements.

They said that this lowers the amount of capital available to SMEs, reducing their abilities to meet short-term cash requirements.

According to Funding Options, alternative finance is on the rise, helped by the UK government’s ‘Bank Referral Scheme’.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

Conrad Ford, chief executive officer of Funding Options, said: “As banks concentrate on providing overdrafts to large businesses, SMEs have had to look elsewhere to support their short-term funding needs.

“SMEs with irregular cash flows rely heavily on overdrafts…The referral scheme will leverage the UK’s positon as a global leader in FinTech to make sure that SMEs are better able to use the diverse range of funding options available to them.”