The last five years have seen a 37% fall in the value of overdrafts provided to SMEs by banks, dropping from just over £19bn to £12bn. However, larger businesses have fared much better, with increase of 25% over the same period from £19bn to £24bn.
Those figures come from new research by online lending platform Funding Options, which has looked into the levels of finance available to small companies in the UK.
“SMEs face growing pressure and difficult choices as the value of overdrafts available to them continues to fall,” says Conrad Ford, CEO of Funding Options. “As banks concentrate on providing overdrafts to large businesses, SMEs have had to look elsewhere to support their short-term funding needs.”
“SMEs with irregular cash flows rely heavily on overdrafts, especially those businesses in the tourism, hospitality and retail sectors which are more seasonal in nature.”
Funding Options says it welcomes the introduction of the Bank Referral Scheme – of which it is a part – and says it should leverage the UK’s position as a global leader in FinTech to make sure that SMEs are better able to use the diverse range of funding options available to them