Lending to businesses is down again according to the latest Bank of England report which indicates that lending to companies of all sizes fallen in the 3 months to February 2014, despite continuing pressure on banks to boost growth by investing more. Net lending to UK firms fell by £500million over the quarter despite a small increase in February.
In total, lending was down by 2.1% in February year on year. Economists pointed to firms paying down debt and tapping into alternative sources of funding but expect businesses to take advantage increasingly of improving credit conditions to fund growth.
Small business groups raised concerns about the latest findings, while banks put the negative lending figures down to firms using large cash reserves to pay down their debts.
The Bank’s report said survey evidence indicates that pricing on loans to small and medium-sized businesses has remained “broadly unchanged” in recent months.
John Allan, national chairman of the Federation of Small Businesses (FSB), said this ” underlines the ongoing challenges small businesses face in accessing finance to meet their growth ambitions”.
He continued: “As the economy continues to gain momentum, ensuring small firms have access to finance is critical.”
At the same time, the Finance & Leasing Association (FLA) has pointed to the fact that new asset finance business has grown at the beginning of the year by 9% to almost £1.7 billion over the previous year. Expectations of new business growth in 2014 are particularly bullish. Nearly three-quarters of FLA members surveyed anticipated growth in new business this year, up from 54% in the previous survey last June.
Jeremy Hall, CEO of leading asset finance and leasing company WestWon, commented, “Asset finance continues to provide a lifeline for many businesses that wish to invest in business growth. As well as the tax, budgeting and flexibility advantages offered by leasing, businesses are also able to benefit from rapid decisions in principle and quick access to the funding they need compared to the typical process of securing a bank loan.”
The Bank of England quarterly publication presents the Bank’s assessment of the latest trends in lending to the UK economy. This report draws mainly on long-established official data sources, such as the existing monetary and financial statistics collected by the Bank that cover all monetary financial institutions, and other data collections established since the start of the financial crisis.
For more information about leasing for business please call WestWon on Tel: 01494 611 456 or download the essential guide to leasing – Financing Your Business Plans.