Increase in lending and SME confidence in 2016

According to the latest SME Growth Watch Report, conducted by Hampshire Trust Bank and the Centre for Economics and Business Research (CEBR), lending to UK small and medium sized (SME) businesses decreased by over £2 billion in 2015, but early indicators in 2016 show an increase in lending and SME confidence.

The report, which analyses the latest full year British Bankers Association (BBA) lending figures, shows that 58 per cent of UK SMEs feel confident that they will be able to secure finance in 2017, with the BBA figures showing an increase in SME borrowing in 2016.

"Smaller businesses make a significant contribution to the UK economy and this looks set to increase even further over the coming years," says Mark Sismey-Durrant, Chief Executive Officer at Hampshire Trust Bank.

"Our research shows that SMEs across the top 10 cities in the UK are forecast to contribute £217 billion to the UK economy by 2020, an 11 per cent increase on the £196 billion contributed in 2015," he continues.

Manchester and Leeds are set to see the largest increase, with the Gross Value Added (GVA) provided by smaller businesses in both of these cities forecast to rise by 15 per cent from 2015 to 2020.

Bristol is predicted to increase its GVA contribution by 14 per cent over the same period.

London, which has the largest number of SMEs, makes the greatest contribution to the UK economy — £149 billion in 2015 rising to £164 billion by 2020 — 76 per cent of the overall total that SMEs in the top 10 cities contribute to the UK economy.

SMEs are predicted to provide 27 per cent of total business contributions to the UK economy in 2020, the research shows, an increase of 1 per cent from 2015.

"The share of total business contributions SMEs are predicted to make to the UK economy in 2020 is higher in almost all 10 of the top UK cities than in 2015, with the share in Birmingham remaining flat," says Sismey-Durrant.

"Our report demonstrates the critical importance of SMEs as the engine room of the economy. Their sizeable contribution to the fortunes of the UK economy — growing to 27 per cent of total business contribution by 2020 — cannot be ignored."

“For too long, larger lenders have dominated personal and business banking and this has had a negative effect on SMEs, which often do not meet the lending criteria. However, SMEs are right to be confident about the future as there are different finance providers out there, away from the high street banks, which are able to support smaller businesses with their expansion aspirations,” he said.

Cashflow continues to be a key issue for businesses in the UK, with a report by HM Revenue & Customs indicating that SMEs now owe £1.8 billion in late corporation tax.

At Beavis Morgan, our specialists to SMEs are available to provide general business advice and to structure your business for tax. We can also assist with business plans and strategy execution, long and short term forecasts, budgets, sensitivity analysis, and calculating and checking compliance with covenants.

With demand for alternative finance likely to increase further as we move into 2017, what is also essential is that SME’s choose a specialist adviser who can recommend the right financial products for their specific business needs.

Our partner business, BM Structured Finance, specialises in sourcing and restructuring debt finance for SME businesses. We match the most suitable products to each individual circumstance and work together to ensure compatibility and satisfaction, thereby enhancing the business’ cash flow liquidity and facilitating maximum growth.

Whether you’re a start up or a well-established business, cash is king and managing its flow is crucial to your long-term success.

Contact Steve Govey or your usual Beavis Morgan Partner for further information about how we can assist you and your business.