Bank lending to large firms increases more than for small companies

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The amount of money lent by banks to medium and large companies has seen a large rise compared to only a small increase for small firms, official figures show. 

In its latest report, the Bank of England (BoE) said lending to medium and large firms in the last quarter of 2012 rose "significantly" and was the first reported rise in availability for over a year. In contrast, there was a "slight increase" for small businesses. The Bank did point out that demand for loans from the small business sector fell. 

The BoE reported that the government's Funding for Lending scheme, which allows bank to provide cheaper credit to companies, was a key driver behind the increase in lending to medium and large organisations. 

Howard Archer, economist at IHS Global Insight, commented that the figures for small firms were disappointing "given that it is a lack of available and affordable credit to smaller companies that has been of particular concern".
 
"The implication is that banks remain very cautious about lending to smaller businesses in the current difficult and uncertain environment," he said.
 
Anil Stocker, co-founder of alternative finance platform MarketInvoice, added: "There has certainly been an increase in credit availability for medium-to-large sized businesses yet small businesses continue to be pushed down the pecking order of the banks.
 
"These small businesses employ millions of people across the country and contrary to today's figures, we know that many are craving credit to help grow and develop but current government plans aren't quite reaching the much needed market.
 
"Moreover, credit-worthy small businesses that had been rejected by the banks in the past few years won't be going back any time soon – many are now using alternative finance sources. The demand has shifted."

 

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