New lenders flooding the market have led to a surge in the amount of money lent to SMEs, according to the National Association of Commercial Finance Brokers (NACFB), the trade body for finance brokers.
In September, the total amount of lending to SMEs was £1.25bn, up 55% over last year’s figure of £800m. This is also a 25% increase on the £1bn lending figure reported in May this year.
The NACFB said funding rose across all lending platforms, including peer-to-peer networks, crowdfunders, challenger banks and high street banks.
Marcus Grimshaw, chairman of the NACFB, said: “In recent years we’ve seen a burst of new lenders enter the market to support many thousands of SMEs who have previously struggled to secure finance, despite being in a strong position to grow. Reaching £1.25bn lending in a single month is a very positive signal that lending conditions for SMEs are improving, and lenders old and new are making an impact.”
However, the NACFB also noted that the majority of SMEs remain unclear about the finance options available beyond the high street banks, despite the rise of new lenders. Traditional bank loans are becoming an increasingly unviable option for SMEs, with government figures suggesting that 50% of SMEs are rejected when approaching their bank for finance for the first time.
“There are still too many business owners who are in the dark about their finance options. There are many lenders in the UK who are already lending to small businesses, and would love to lend to more,” said Mr Grimshaw.
Chancellor George Osborne is expected to announce measures to boost SME lending in the Autumn Statement next month.
