SME funding gets a boost

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While some of the UK workforce may be nursing a Euros-induced slow day, a report released today could make those monitoring the funding landscape for medium-sized business owners a little more optimistic.

UK Finance has released its Business Finance Review report. The quarterly study looks at how the finance needs of SMEs are being supported through lending from mainstream lenders and specialised finance providers. The report’s headlines are that gross lending has increased to its highest level in almost two years, while there has also been a rise in the number of approvals.

Both the 15 per cent jump in gross lending and uptick in approvals come after the release of last month’s Commons Treasury committee report looking into access to finance. The report reviewed upcoming changes to SME lending but also encouraged banks to make borrowing easier.

UK Finance’s report reveals that overall finance approvals were 27 per cent higher in 2024 Q1 compared with the previous quarter, with the value of approved finance increasing by 10 per cent. Overdraft approvals were up 27 per cent and new loan approvals were 26 per cent higher than the previous quarter.

It says:

“These are positive first steps, particularly in signalling that the main high street lenders remain an important part of a diverse finance landscape for SMEs. However, given continued caution in the near-term economic outlook and the short-term political uncertainty that the election will generate, we’ll need to see growth in finance demands being sustained in the coming year before recovery is assured.”