SME lending review launched amid stubbornly high debt costs

SMES in Britain continues to pay debts at more than 20 times by the epidemic, according to industry data.

The Ministry of Business and Trade says that this shows the absence of “competitive pressure” on the prices of loans, which prompted it to open a review of the debts of small and medium -sized companies.

The latest figures from the United Kingdom, which represents the leading street banks, revealed that their net loans for smaller companies decreased by 7 billion pounds last year. Although the payment rates have slowed down in the peak in 2022 and 2023, when companies were settling Covid era loans, the current trend still exceeds 2019 levels. The government and the British Business Bank (BBB) ​​fears that the aversion to the remaining risks suffocates the expansion of business that affects the need and contribute to continuous productivity issues in Britain.

The data from BBB indicated that only 43 percent of small companies that were reached in the field of external financing in the second quarter of last year, a decrease from 50 percent in late 2023. They care about these figures, called on the government to evidence of barriers that prevent borrowing from unjustified groups, such as entrepreneurs with disabilities or those in ethnic minorities. The review will only focus on debts and will not evaluate the availability of stock financing.

Officials note that the Challenger banks, which must collect wholesale funds at higher costs than the main banks, have left a small space to reduce interest rates for small and medium -sized companies. In contrast, the largest lenders benefit from the presence of large deposit rules, giving them a competitive advantage. The Ministry of Business and Trade hopes that the review will determine ways to stimulate lending options at reasonable prices.

“For small companies, getting out of the land is one of the most difficult parts of scaling and central so is the ability to reach financing. For this reason, this invitation will be to obtain important evidence to allow us to know what to do to support small and medium -sized companies so that they can grow,” said Gareth Thomas, Minister of Small Business.

Although the total lending of Major Banks increased by 13 percent to 16 billion pounds in the past year, the sector now represents only 40 percent of the Linding Sme market, a decrease from 90 percent in 2008. Competitive banks such as Allica and Shawbroook, along with alternative lenders such as Thincats and IWoca, represent 60 per cent. The remaining. Ravi Anand, the administrative director of Thincats, commented that companies that use debt financing “seven times more growing than Go Bust” called for the regulations that make the main banks to direct borrowers towards the two alternative lenders.

Despite the signs of increasing high-end lending approvals-23 percent of loans and 47 percent higher for clouds in the last quarter of last year-the seizure of the outposed clouds is still removed. The government warns that the average approval rate for companies that seek to obtain loans is less than 50 percent, a decrease of 67 percent in 2019, which confirms the volume of the challenge facing smaller companies.