8th September 2016

Bank Support for SMEs – 2nd Quarter 2016

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