"Financing projects from £50,000 to £100 million"

Net lending to small businesses continues to shrink

Net lending to small businesses continues to shrink

Further evidence has emerged to show that small businesses remain low on the priority list relative to mortgage lending.

Lenders approved 66,735 residential mortgages for home purchases during the month of September, figures from the Bank of England showed – the highest level in over five-and-a-half years.

And the outlook for businesses is beginning to look rosier, after it was revealed that net commercial lending to businesses rose by £700 million, recovering from a drop in August.

But net lending to SMEs fell again, by £400 million, as firms continued to repay more than they took out.

The Bank of England recently revealed that lending to small businesses had fallen by £600 million in the second quarter, as suspicions rose that the Funding for Lending Scheme had favoured mortgages over small businesses (read more).

But consumer credit rose by £400 million last month, in a sign that confidence is returning along with more concrete GDP figures.

It remains to be seen whether this optimism will become reflected by a more positive lending relationship between banks and small businesses.

Wednesday, 30 October 2013 14:14
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