Image for Small business lending enjoys record levels over past year

Small business lending is up year on year

Small business lending has increased by almost 30 per cent (29.8 per cent) to £20.7 billion, according to the National Association of Commercial Finance Brokers’ (NACFB) latest annual figures.

The figures are based on business written by NACFB brokers between July 2015 and June 2016. Over the past year, lending to SMEs has exceeded the pre-recession high of 2007. It’s also the seventh consecutive year that total lending to small businesses has grown.

However, while traditional forms of lending, such as commercial mortgages, have had an impressive 12 months, with business written over £5.3 billion, up 54.8 per cent on last year, lending in the alternative finance space, which includes peer-to-peer and crowdfunding, has slowed.

Business written by NACFB brokers over the past 12 months has fallen by 14.4 per cent, down from £848 million to £725 million.

The commercial mortgage business has benefitted from renewed confidence in longer term lending, with a wider range of deals to choose from and an increased appetite from the traditional high street lenders. Since 2013, commercial mortgage business written by NACFB members has more than doubled, up from £2.23 billion in 2014.

Strong areas of small business lending

Other areas that have seen strong growth include, invoice finance (up 22.8 per cent), leasing & equipment finance (up 10.5 per cent), development finance (up 49.8 per cent) and bridging finance (up 74.6 per cent).

Adam Tyler, chief executive of the NACFB, says that it has been a phenomenal and record breaking year across the commercial finance sector: ‘With the UK’s SME community showing a real appetite for growth, despite the uncertainty of Brexit, we have seen small business lending at levels above even those registered before the financial crash.’

The figures show there has been a ‘significant switch’ by small businesses back to traditional forms of lending.

‘The alternative finance sector has grown at such a pace that it was inevitable that rate of growth couldn’t be sustained. Peer-to-peer will always have its place, but alternative forms of funding are no longer the only future; they are just one of many forms of finance available to small and medium sized businesses.’

Tyler adds that there has ‘never been a better time for businesses to secure finance’, as the commercial finance sector continues to innovate and diversify.

‘The challenge is to make sure the message reaches SMEs that there are many routes to funding.’

Further reading on small business funding


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