Banks rein in lending amid concerns of slowdown
Banks are keen to avoid a build up of debt (pic: Terry Murden)
Banks have reduced their lending to smaller firms amid concerns of a slowdown in the economy.
New data reveals lending to SMEs fell by 8% between 2014 and 2018, and in some areas by more than a fifth, according to business lender iwoca.
It also found wide differences in lending between local areas. Lending to small businesses in Blackpool fell by 27.6%, while Wokingham in Berkshire was up by 18.2%.
Lending to businesses in Scotland fell by 5.8%, while thos in the wealthiest areas of England were able to borrow £2 billion more than those in the poorest parts of the country.
The North West of England was the hardest hit region, with lending from big banks falling by 16%.
London got off lighter than any other region, with a 3% drop in funding. Westminster enjoyed a 41.3% surge in lending.
Iwoca chief executive Christoph Rieche said told PA News: “It’s … concerning that, in many parts of the country, major banks aren’t serving small and microbusinesses with the funding required to help them thrive.”
The banks say they are reining in loans to avoid another debt bubble.
Small Business Minister Kelly Tolhurst said: “We’re backing businesses right across the country.
“£7 billion from the government-owned British Business Bank is supporting over 91,000 SMEs, the majority outside London and the South East and our Northern Powerhouse Investment Fund has invested over £135 million in smaller businesses across the North of England. But we are determined to do more to level up across the country.”