Commenting on the latest figures, Mike Conroy, Director – Commercial Finance, said:
“£4.8bn of new lending was provided to support SMEs across all regions and industry sectors of Great Britain in the third quarter, with eight in 10 business finance applications approved. However, the statistics released today do reflect a more subdued demand for bank finance, with application volumes five per cent lower than a year ago, as many SMEs have elected to self-fund. Meanwhile, stocks of lending and deposits for SMEs have remained stable, standing at £92.6bn and £170.1bn respectively.”
SME net borrowing
SME borrowing levels remained stable in the third quarter of the year, continuing the trend of subdued demand for bank finance over the previous 12 months.
SME borrowing facilities at the end of Q3 2017 stood at £108.7bn, of which structured term loans were £83.5bn, overdrafts were £9.1bn and facilities available but undrawn were £16.1bn.
New loans less repayments resulted in a slight increase in net lending of £189mn in the third quarter. Overdraft levels largely remained unchanged.
Number of loan & overdraft applications and percentage approved
Applications volumes for bank finance have been reducing for some time. The third quarter saw a total of 30,010 loan applications, some 5% fewer than in the same quarter a year earlier.
The number of overdraft applications in the quarter (41,153) was lower than in Q3 2016 (43,047).
Approval rates in the quarter were:
Smaller businesses – Loans 79%, Overdrafts 75%
Medium businesses – Loans 86%, Overdrafts 96%
Value of loan & overdraft application approvals
Reflecting the lower number of loan applications in Q3, aggregate loan & overdraft facilities approved, of £4.8bn, were some 3% lower than in Q2 2017 and also some 15% lower than in the same quarter of 2016.
£1.3bn of loan facilities and £0.5bn of overdraft facilities were approved for smaller businesses. £2.4bn of loan facilities and £0.7bn of overdraft facilities were approved for medium businesses.
The average loan value approved for smaller and medium-sized businesses in the quarter reduced, to £74,382 and £487,494 respectively.
SME deposit account balances
Cash held by SMEs, predominantly in current accounts, totalled £170.1bn at the end of September 2017. A re-segmentation of business customers within one banking group resulted in a group of
firms being re-allocated outside of the SME scope of these data, causing a break in the series, but the underlying annual growth in deposits is around 3%.
At the end of June, £103.5bn of cash was held in current accounts and £66.6bn in deposit accounts.