9th March 2017

Bank Support for SMEs – 4th Quarter 2016

Mike Conroy, BBA, Executive Director, Corporate and Commercial Banking said:

“Our SME lending data consistently shows that banks say ‘yes’ to 8 in 10 applications for finance and in Q4 2016, over £5 billion of new lending was approved across the regions and industry sectors. Total lending to SMEs stands at £110 billion and within that, use of structured loans increased by £1.5bn (net) last year, suggesting improved business investment. However, total applications for bank finance were 9% lower last year, as businesses explored alternative options such as leasing finance, or continued to build their cash reserves to finance operations.”

SME net borrowing


SME borrowing facilities at the end of 2016 stood at £109.9bn, of which structured term loans were £85.3bn, overdrafts were £9.0bn and facilities available but undrawn were £15.5bn.

This level of support for SMEs was constant over the year, with small net increases in loans seen in all months. Over the year, new loans less repayments resulted in net lending of £1.5bn.

Overdraft levels were largely unchanged through the year, at £4.1bn for smaller businesses and £4.9bn for medium-sized businesses.

Number of loan & overdraft applications and percentage approved


There were 9% fewer loan applications in 2016 than in 2015, while December’s total of 30,329 was the lowest monthly number yet seen.

The lower demand in the year was predominantly seen across smaller businesses. The number of overdraft applications in December (43,700) was slightly higher than in December 2015 (42,962).

Approval rates in the quarter were:

  • Smaller businesses – Loans 79%, Overdrafts 76%
  • Medium businesses – Loans 88%, Overdrafts 96%

Value of loan & overdraft application approvals


Reflecting the reduced number of loan applications in Q4, approved lending of £5.2bn new loan & overdraft facilities was some 17% less than in the same quarter of 2015.

£1.4bn of loan facilities and £0.5bn of overdraft facilities were approved for smaller businesses.
£2.6bn of loan facilities and £0.6bn of overdraft facilities were approved for medium businesses.

The average loan value approved for smaller businesses in the quarter (£72,672) remained unchanged from Q3, while the average for medium sized businesses rose to £440,995.

SME deposit account balances


Cash held by SMEs in current and deposit accounts totalled £174.7bn at the end of 2016, some 7% more than a year earlier. Much of this growth was seen in current account deposits, reflecting increased cash-flow holdings.

At the year-end, £104.6bn of cash was held in current accounts and £70.1bn in deposit accounts.