Small business lending up in the third quarter

Lending to small businesses grew by just under £1bn in the third quarter of 2008 new figures out today reveal. This growth was marginally lower than in the second quarter and in the corresponding quarter of 2007.

Over the twelve months to September:

• Loans grew 10% to £44.8bn, while overdraft borrowing stood at £9.3bn, some 4% higher than a year earlier.

• Total deposits totalled £55.0bn, 3% up on the year.

• New banking relationships have been established for 538,300 small businesses.

BBA statistics director, David Dooks, said:

“The effects of the deteriorating economy are becoming more apparent.  Slowing growth in deposits shows that small businesses are increasingly funding their activities out of cashflow, but a rise in lending in the third quarter, consistent with growth in the previous quarter and the corresponding quarter of 2007, shows banks continuing to make finance available.”

For further information, please contact:
Brian Capon, assistant director, media (020 7216 8810 brian.capon@bba.org.uk )
David Dooks, statistics director (020 7216 8837 david.dooks@bba.org.uk )

Notes to Editors:

1. The BBA is the leading UK banking and financial services trade association and acts on behalf of its members on domestic and international issues. Our members, from 60 different countries, collectively provide the full range of banking and financial services. They operate some 130 million personal accounts, contribute £50bn to the economy, and together make up the world’s largest international banking centre.
2. Although clubs, charities and societies operate small business accounts with banks, their activities are not commercial in nature and are therefore not covered by these data. 
3. In recent years, the proportion of borrowing on overdraft by small businesses has declined.  Term loans are more prevalent, with well over three-quarters of term lending having a maturity of more than three years, with interest charged on a variable rate basis.
4. Small businesses are defined here as those commercial businesses with an annual bank account turnover of £1 million or less.
5. Individual banks contributing to this survey are Abbey, Alliance & Leicester Commercial Bank, Bank of Scotland, Barclays, Clydesdale (inc Yorkshire Bank), HSBC, LloydsTSB, Royal Bank of Scotland (inc NatWest) and The Co‑operative Bank.
6. The Statistics section of the BBA website (www.bba.org.uk) provides information on bank support for small businesses, whilst the Policy Issues section contains a Small Business area, dedicated to providing practical help and advice for small businesses, including a business account finder.
   
7. Previously released data may have been revised, as in the table below.  Changes are adjusted where appropriate to remove the effects of reporting base changes, thus reflecting underlying business movements.  Given the seasonal nature of support throughout a year, comparable figures for the same quarter a year earlier are shown.

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