Small businesses borrow amidst political ambiguity » SMEInsider

Small businesses borrow amidst political ambiguity

Lending to SMEs has increased in the three months up to February, according to Bank of England (BoE).

Trends in Lending, BoE’s quarterly publication presents the Bank’s assessment of the latest trends in lending to UK economy.

 “Overall, the rate of growth in some measures of the stock of lending to UK businesses picked up in the three months to February,” April’s edition reports.

SMEs’ borrowing from financial institutions has increased by 19 per cent year-on-year in February, reaching £4.3 billion.

However, data from the Government’s funding for lending scheme showed that lending by the scheme’s participants to all businesses was down by £6.9 billion in Q1 2014. Net lending to SMEs was down £0.8 billion.

On the other hand, gross lending by UK Monetary Financial Institutions (MFI) to SMEs was higher in 2014 than in previous years.

Stephen Hodges, CEO of merchant banking group Close Brothers, said it was counter intuitive that SMEs continue to borrow in the current uncertain political climate.

“It is surprising that we have not seen more small businesses sitting on their hands and waiting for the outcome of the election. In fact many small businesses have been borrowing and investing regardless of the political uncertainty,” stated Stephen Hodges.