SMEs see 55% jump in funding » SMEInsider

SMEs see 55% jump in funding

Funding for small businesses has hit record levels thanks to an influx of new lenders, but SMEs still remain unsure of their options.

The amount lent to SMEs rose 55% in September, the figure rising to a record £1.25bn, according to the National Association of Commercial Finance Brokers (NACFB).

Funding rose across all lending platforms, the NACFB said, including peer-to-peer networks, crowdfunders, challenger banks and high street banks.

The total was a 25% jump on the £1bn lending figure reported in May, and compares with £800m last September and £750m in September 2012.

“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,” said Marcus Grimshaw, chairman of the NACFB. “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.”

New UK lenders include Shawbrook Bank, founded in 2011, and peer-to-peer lender Wellesley & Co, which was set up last year.

But despite the rise of new lenders, the majority of SMEs were still unclear about options available beyond the high street banks, the NACFB said.

Government figures suggest that 50 per cent of SMEs are rejected when approaching banks for finance for the first time, and many turn to credit cards or overdrafts instead to fill the funding shortfall.

The NACFB said the Government should continue promoting funding initiatives such as the SME referral process, which helps to match firms rejected by the banks with alternative lenders.

“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 more,” said Mr Grimshaw.

Chancellor George Osborne is expected to announce measures to boost SME lending in the Autumn Statement next month.