Comments on British Business Bank report on SME lending

A report by The British Business Bank on SME lending in 2020 shows that almost half (45%) of SMEs applied for external financial support in 2020, compared to 13% in 2019. This resulted in gross bank lending to SMEs to increase by 82% to £104bn. In terms of additional points:

  • Nine in ten (89%) businesses seeking external financial support in the past year did so because of the impact of Covid-19, with 75% of these SMEs seeking external financial support to help with cashflow
  • 8% sought finance, at least in part, to pivot or change their business model and 7% to invest in the digital capability of their business
  • The majority of sectors saw between 20% and 30% of their SME population take up a loan during the pandemic
  • Across both BBLS and CBILS, the majority (59%) of SMEs accessing government-backed finance schemes have borrowed more than 20% of their reported turnover.

Chirag Shah, CEO of Nucleus Commercial Finance said: “The British Business Bank and the lending industry have played a vital role in ensuring SMEs have had access to the crucial funds they need to survive during the pandemic. Over the past 12 months we have seen fintech and alternative lenders move into the mainstream due to their ability to provide SMEs with funds quickly and, as a result, more businesses now turn to our industry as their first point of call.

“The impact of Covid-19 on SMEs will be long lasting, so we need to see continued innovation across the industry to provide creative solutions which suit businesses’ individual needs. We firmly believe fintech lenders are best positioned in the industry to support SMEs thanks to the ability to design flexible products, powered by cutting-edge technology. Future innovation will further reinforce that fintechs can no longer be considered an alternative; we are the true mainstream lender.”