New Loans To Small Businesses Continue To Increase
Despite the fact that the majority of the population in the UK are currently in the process of tightening their belts and cutting back on their spending, coupled with the fact that banks and building societies are restricting the amount of new loans they are prepared to offer, it seems that new lending to small businesses has continued to increase.
The latest figures, which have been released by the British Banking Association (BBA), have shown that the amount of lending on new loans to small businesses in the three months leading up to the end of September this year increased by just less than £1 billion.
This level of new business loans remains fairly consistent with the previous three months of the year and also for the same period twelve months ago, although the overall total loan amount has reduced slightly on these previous figures.
Over the course of the last twelve months, to the end of September, the total amount of lending through small business loans increased by around 10 per cent, to £44.8 billion. At the same time, business overdraft levels grew by around 4 per cent to stand at £9.3 billion. This clearly shows that the banking system still has confidence in small businesses, if they are prepared to offer them new loans, despite the current economic climate.
Although the number and amounts of new business loans and overdrafts has continued to increase over the last year, the total level of business savings only increased by 3 per cent over the same period, to stand at around £55 billion.
Whether these new business loans are to fund expansion, or just to keep the business running is not clear, but with the rate of growth of borrowing exceeding that of saving, it would seem that many businesses are taking out new loans to maintain cash flow.
