According to data published for the first time by the British Banker’s Association (BBA), Britain’s banks cut back on lending to small businesses in all but 22 postcode districts in the UK, between 2011 and 2012.
This has sparked accusations that lenders are failing to support a key potential area of economic growth. Measured across wider areas, it fell in all nine regions of England as well as in Scotland and Wales. The EC postcodes of London saw the biggest decrease in net lending between 2011 and 2012.
Currently, the postcode breakdown, described by commentators as being ‘reluctantly published’ by the banks through the (BBA), only covers the first two initials of any postcode. A voluntary agreement reached after the threat of legislation hung over the banks means that by the end of this year more detailed data will be published by seven lenders, for 10,000 postcodes.
The data will include not only loans to small businesses but also mortgage offers to households and unsecured personal loans. This data via the BBA or the Council of Mortgage Lenders, means there will be 70,000 sets of data on lending released each quarter.
The breakdown of the 120 main postcodes shows there was an increase in net lending in only 22 towns and cities between 2011 and 2012. The BBA data also shows that small businesses in London and the south-east received a smaller proportion of lending than the size of the sector would merit. London had a 21% share of borrowing by small and medium-sized enterprises but generated 29% of the country’s SME turnover. Businesses in the south-east received 13% of loans but were responsible for 17% of national SME turnover.
The BBA also published data showing a rise in net lending of £172m in June – the first rise since January. This could possibly be seen as evidence that the Government funding for lending scheme, which provides cheaper loans to banks provided they pass them on to customers, is beginning to have an impact. Overall though in 2012, lending to small businesses contracted by £4.5bn compared with the previous year, although the amount of cash small firms had in the bank increased by £7.2bn overall between 2011 and 2012. Only in Wales and the South-West was the amount lent out to small business greater than the amount they held on deposit.
So, armed with the facts above, if you would like more information on this subject please don’t hesitate to get in touch.