CashNews.co
Overall gross lending to small and medium-sized enterprises (SMEs) was broadly stable at around £4bn in Q2 2024, data from UK Finance’s Business Finance review has revealed.
Its latest Business Finance Review, which reported on the finance needs of small and medium-sized enterprises (SMEs) in the second quarter of 2024, collated data provided by a collection of high street bank lenders.
While gross lending to SMEs remained stable at £4bn, echoing the Q1 figure, it remained higher than that of a year previously at £3.6bn.
Growth in lending over the first half of this year varied across sectors and regions.
H1 2024 saw regional lending growth strongest in the East Midlands and North West.
The only region to post a decline in this period was Yorkshire and Humberside.
H1 2024 lending to SMEs in agriculture, construction, and real estate noticeably increased on the previous year, whereas lending to manufacturers and SMEs in transport, storage, and communications was down.
As the economy continued to recover from the mild recession at the end of last year, UK Finance’s surveys indicated improving sentiment across all business sectors going into the second half of 2024.
While there was an increase in insolvencies, as a share of businesses these remained lower than in the 2008-9 downturn.
Q2 2024 also saw a notable rise in overdraft approvals for small enterprises, with moderate increases in loan and overdraft approvals for medium sized enterprises.
Across all sectors, approval volumes in Q2 were up on the same quarter a year ago, indicating a turning point after lower levels of lending seen after the pandemic.
The total value of deposits levelled off in Q2 2024 and at over £220bn, SMEs retained a good deal of the savings cushion accumulated during the pandemic.
Total deposits were still roughly 14% higher compared with the start of 2020.
The declining trend in cash deposits has been evident across all sectors of the economy.
The value of repayments has remained stable over the past year, running to around £6bn per quarter.
As many SMEs have outstanding Covid-19 loans with a few years of repayments remaining, this level looks set to continue.
David Raw, managing director of commercial finance at UK Finance, said: “With many businesses prioritising repaying Covid-19 loans, appetite for new finance remains subdued.
“However, finance is still there for SMEs where it is affordable.
“As the economy looks to turn a corner, the finance sector remains ready to provide it with the funds it needs to manage cash flow, and to invest and grow.
“Looking to the future, lenders can help businesses with planning their transition to Net Zero and any other long-term goals.”