Small business lending soars in 12 months

Lending to small businesses has risen by nearly 30% in the past 12 months to an all-time high of £20.7 billion, as firms become increasingly aware of the options open to them.

The figures from the National Association of Commercial Finance Brokers highlight that lending surpassed its 2007 pre-recession peak, marking seven consecutive years of lending growth.

It comes against a backdrop of global economic uncertainty and with question marks remaining over the future of the UK in the wake of the EU referendum vote.

Commercial mortgage levels have more than doubled from £2.23 billion in 2014 to £5.3 billion – a rise of 54.8%.

An increasing number of offers from traditional high street lenders has been the driving force in this rise, although their appetite for lending has also returning following the economic downturn.

Invoice finance also rose by nearly 23% while leasing and equipment finance was up by 10.5%, suggesting firms were looking to invest in order to ensure growth.

Bridging finance and development finance also rose by 74.6% and 49.8% respectively, while the buy-to-let lending market rose above £5 billion despite new regulatory measures.

Growth among alternative finance options has slowed though, as crowdfunding and peer-to-peer lending written by NACFB brokers has dropped by 14.4% to £725 million.

The NACFB suggest that firms are switching back to traditional forms of lending, while the slowdown in alternative finance is to be expected given such substantial, and unsustainable, growth in the past few years.

For firms that seeking to grow or consolidate their position, alternative finance provides many much needed opportunities.

Even those that are fearing for their futures can still find solutions that can support them in the short term, while the finance could be used to aid a merger or acquisition should market conditions support it.

The NACFB claims that while peer-to-peer lending will always have a place in the wider financial picture, alternative lending provides a range of other options that could be equally beneficial.

By Phil Smith

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