UK Finance has reported a stabilisation in lending to small and medium-sized enterprises (SMEs) in the country, with approximately £3.5bn ($4.4bn) disbursed in the fourth quarter (Q4) of 2023.  

This figure mirrors the lending amount of Q3 2023, indicating a halt in the downward trend that began in Q2 2022.  

UK Finance’s newly released ‘Business Finance Review’ report further highlights that for the first time in two years, medium-sized businesses experienced a rise in gross lending. 

The competitive landscape of SME lending is shifting, with 59% of such financing now sourced from outside the major banks.  

The Q4 saw an uptick in approvals for new financing, with new loans and overdrafts increasing by 3% and 7%, respectively, compared to the previous quarter.  

Notably, the value of new loans approved reached a peak not seen since the third quarter of 2022. 

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.

Medium-sized businesses, in particular, witnessed a significant boost, with overdraft approval values surging by nearly a fifth and loan approval values by 17%.  

The accommodation and food services, along with recreation and personal services sectors, also saw increases in lending. 

Despite a seasonal dip in December, monthly repayment trends remained stable. The report also observed a slowdown in the decline of SME deposits in the final quarter, ending the year nearly a fifth higher than pre-pandemic levels. 

UK Finance noted that the invoice finance and asset-based lending (IF/ABL) sector achieved a milestone, supporting UK businesses with a combined turnover of £316bn, an all-time high.  

This turnover led to record availability within IF/ABL facilities, with more than £50bn offered in working capital facilities at year-end.  

The average value of advance per client reached the second-highest level recorded, with clients drawing down an average of £584,000. 

The report cited demand uncertainty, higher interest rates, and the impact of pandemic-related lending as factors contributing to the overall weakness in gross lending in 2023.  

However, the previous five quarters’ decline in gross lending ceased in the final months of the year. 

David Raw, managing director of commercial finance at UK Finance, said: “There were promising signs that demand for new finance may be turning a corner in the final quarter of 2023. Approvals for new loans and overdrafts increased and the rise was broad-based across all sectors.”