An investigation by debt adviser Hadrian’s Wall Capital (HWC) has shown that over half of the UK saw bank lending to SMEs fall in 2018.
74 out of 132 postal areas of the country saw falls in the value of outstanding bank loans to SMEs over the last year, which follows on from the fall in SME bank lending in 2017.
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Birmingham suffered the biggest fall in the country, with lending to SMEs falling 8% in the last year, followed by Oldham (7%) and Sheffield (6%).
According to HWC, these former industrial areas are often the most in need of SME finance to help restore efforts to revitalise their local economies.
Only three areas of the 132 areas studied; Newport, Warrington and Oxford, saw increases in lending of 5% or more in the last year.
While a previous study by HWC showed evidence that SME loans are less risky than high-yield corporate bonds, the company claims SMEs are often regarded as being of a higher risk of default compared to larger businesses and banks have been keen to de-risk their balance sheets ahead of a potential no-deal Brexit.
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By GlobalDataMarc Bajer, chief executive officer of Hadrian’s Wall Capital, said: “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.”
Previous HWC data showed a £9.7bn fall in SME lending across UK in 2017. In that study 101 of 120 areas of the UK saw net falls in the value of outstanding bank loans to SMEs, as banks continued to withdraw from lending to small businesses.
