HSBC sets up £10 billion funding pot for SME support

HSBC is to commit at least £10 billion in loans to small and medium businesses this year. This is the bank’s largest funding package for SMEs to date, topping the fund of just more than £8 billion it announced a year ago.

The move comes despite continuing uncertainty as the referendum on membership of the EU nears. Lloyds Banking Group warned last week of “economic uncertainty and potential volatility in the short term” in the event of a vote for ‘Brexit’ while German giant Deutsche Bank said that London would be in danger of losing its position as Europe’s central forex trading hub.

Ian Stuart, HSBC’s UK head of commercial banking, dismissed these fears as they applied to commercial lending however. He told the Financial Times: “Businesses will continue to operate either way, whether you’re a tax operator or a corner shop, you will still be trading after June.”

According to Stuart, the bank had not seen any drop off in demand for SME loans so far. A recent survey by the Bank of England revealed that the proportion of SME loans approved by the major high street banks increased for the fourth consecutive quarter in the first three months of 2016.

This suggests that demand for bank funding by SMEs continues to grow and the banks are returning to greater small business lending following a slowdown in the wake of the financial crisis.

During that period alternative finance providers and challenger banks rose to greater prominence, giving SMEs more options when it came to refinancing and securing funding for growth.

HSBC has acknowledged the changing marketplace and said that it must adapt to customers’ demands for faster and simpler access to their banking services. Alongside the £10 billion fund the bank has also introduced a new virtual platform that, it says, cuts business loan application and approval times in half.

The bank is also fixing its business banking fees at a set rate for 12 months, in an attempt to attract and retain customers.

By Phil Smith

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