Access to high street finance for the owners of small UK companies has taken another hit, as new figures reveal a sharp decline in business borrowing for February.
According to statistics from the British Bankers’ Association (BBA), business borrowing from high street lenders decreased by £1.6bn in February. The annual growth rate of 0.9 per cent represented a sharp decline on the 2.1 per cent annual increase recorded in January, when lending increased by £3.4bn.
Eric Leenders, BBA retail banking director, attributed the decline in business borrowing to a “cautious approach” from company decision makers who have used “cash reserves and alternative lending sources to finance operations”.
— BBA (@bbavoice) March 24, 2017
However, responding to the fall in business borrowing, Angus Dent, CEO of P2P lender ArchOver, explained that while year-on-year lending was up, small business owners were the most likely to have lost out from a significant decline in growth.
“Most of the increase is down to borrowing by larger companies. Not only that, but the increase is offset by a steep decline since January and set against a much-declined base – we’re only just returning to 2007 lending levels almost a decade after the crash. This is not growth – it’s repair work,” he said in a statement.
Dent warned the owners of small firms that “lean times” were not set to shift in the near future, and with banks “still on edge” those seeking to borrow for growth should look at alternative finance.
“By borrowing directly from investors through P2P platforms, business owners can bypass institutional nerves and quickly obtain the essential funds they need to boost growth.
“When SMEs succeed, the whole economy succeeds. P2P lending will play an essential role in getting small UK businesses back on track, building a strong base for increased growth in the future,” Dent concluded.
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