SME lending booms in 2020

By Daniel Lanyon on Thursday 7 January 2021

Alternative Lending

Since the extension of government support from November 2020, UK Finance estimates that £600m of funding has been made available through the topping-up of existing BBLS facilities.

SME lending booms in 2020
Image source: Photo by Anna Shvets from Pexels

Lending to SMEs in the UK was more than double the 2019 total, according to figures released by UK Finance, reaching £54bn.

Gross lending increased by £36bn in the period, boosted by over 1.5 million businesses borrowing with government-guaranteed facilities totalling over £68bn.

Across the UK lenders have issued 229 Bounce Back Loans Scheme (BBLS) and 10 Coronavirus Business Interruption Loan Scheme (CBILS) facilities for every thousand businesses, dwarfing loan approval volumes seen in previous years.

Stephen Pegge, Managing Director of Commercial Finance at UK Finance, says SME financing was particularly in demand in the service industries, which were amongst the hardest hit by the pandemic.

“While the business community in aggregate does not appear over-indebted, with liquidity reserves and capacity to provide finance strong overall, many individual businesses and some specific sectors are facing significant and much more extended disruption and may find themselves in financial difficulty in 2021," he said.

“Approvals of overdraft facilities rose significantly at the start of last year but demand in the second and third quarters moved towards loans. SMEs can now 'top-up' their Bounce Back Loan to the maximum of £50,000 or 25 per cent of their turnover if lower, with the application deadline for the schemes now running until the end of March 2021. This extension and the wider support of the industry will help businesses access the finance they need as the pandemic continues to affect the economy," he added.

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