The latest report from UK Finance shows “we have reached a tipping point in the economy”, displaying one of the more positive readings of SME finance in some time.
The report, Business Finance Review 2024 Q1, found the first quarter of 2024 brought a material increase in gross lending to small and medium-sized enterprises of 15 per cent compared with the previous quarter.
At just over £4bn, this was 8 per cent higher than the same period last year and the joint highest lending figure since the final quarter in 2022.
This was received warmly by Funding Solutions UK Limited director, Ian Hepworth, who said: “As this report suggests, we seem to have reached a tipping point in the economy, with more and more businesses looking towards the future and expansion.
“Many businesses are taking a more positive view and are seeking finance to achieve their goals.
“I am certainly seeing a lot of growth stories from businesses looking to source working capital for expansion.”
He contrasted this with the trends seen in recent years, arguing it has been “more about securing finance for survival and less about growth”.
The report also found the number of finance approvals to SMEs rose by over a quarter in the first three months of the year.
UK Finance detailed that overall finance approvals were 27 per cent higher in Q1 2024 compared with the previous quarter, equating to a 10 per cent rise in the value of approved finance.
This followed a 5 per cent rise in volumes at the end of 2023 and was the highest number of approvals for new or increased loans and overdrafts since Q1 2022.
However, Mint Mortgages & Protection independent financial adviser, David Stirling, cautioned: “Overall, this readout does offer a positive outlook for business development and expansion later this year, but is it overly positive?
“We are still in the era of high interest rates and there are no guarantees rates will be coming down this week, even though inflation is now close to target.
“With the general election countdown now on, SMEs are still in deep and uncertain waters.”
The report concluded by looking to the future, stating that the prospect of interest rates starting to come down and the likelihood of more policy clarity following the election will “hopefully” cement a recovery in SME confidence.
Thanks to the Newspage community for sharing their thoughts with FTAdviser.
tom.dunstan@ft.com
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