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From 1 July 2017, the finance and banking industry operating in the UK will be represented by a new trade association, UK Finance. It will represent around 300 firms in the UK providing credit, banking, markets and payment-related services. The new organisation will take on most of the activities previously carried out by the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association.x
Mike Conroy, the BBA’s Managing Director for Business Finance, said:
“Banks are firmly committed to helping SMEs do what they do best – drive economic growth and create jobs right across the country.
“This data shows that there has been a continued net expansion in SME borrowing this year, with around £6 billion of new lending approved each quarter.
“The first half of this year saw a drop in loan applications amid uncertainty around the EU referendum, and lower business and consumer confidence. SMEs increased their cash deposits as a buffer in response to this uncertainty.”
SME net borrowing
SME borrowing at the end of Q2 2016 stood at £109.0bn, of which structured term loans were £86.6bn, overdrafts were £9.3bn and facilities available but undrawn were £13.0bn.
This level of support for SMEs has been constant over the past year, with small monthly net increases seen for over more than a year now. In the latest quarter, new loans less repayments resulted in overall net lending of £0.5bn.
Overdraft levels remained largely unchanged at £4.5bn for smaller businesses and £4.8bn for medium-sized businesses.
Number of loan & overdraft applications and percentage approved
Compared to Q2 2015, there were 10% fewer loan applications, with numbers dropping from 38,203 to 34,828 in Q2 2016.
Overdraft applications remained broadly unchanged to the same quarter a year earlier, staying at 44,406 compared to 44,266.
Approval rates in the quarter were:
Smaller businesses – Loans 81%, Overdrafts 77%
Medium businesses – Loans 90%, Overdrafts 96%
Value of loan & overdraft application approvals
In Q2, banks approved £5.9bn of new loan & overdraft facilities, some 15% less than in the same quarter of 2015.
£1.8bn of loan facilities and £0.6bn of overdraft facilities were approved for smaller businesses.
£2.9bn of loan facilities and £0.7bn of overdraft facilities were approved for medium businesses.
The average loan value approved for smaller businesses in the quarter was little changed at £82,132 while the average for medium sized businesses rose to £440,784.
SME deposit account balances
Cash held by SMEs in current and deposit accounts totalled £165.9bn at the end of Q2, some 8% more than a year earlier.
£97.2bn of cash is held in curent accounts.
£68.6bn of cash is held in deposit accounts