THE Federation of Small Businesses in Scotland has described the credit climate as “markedly better”, after official figures showed lending by banks to small and medium-sized firms in the UK rose sharply last month.
Figures published by the Bank of England showed that lending to small and medium-sized enterprises in the UK had risen by £443 million in October on a net basis, which takes into account repayments. This is the biggest rise in any month since February. And it followed a £250m net increase in lending to UK SMEs in September.
Colin Borland, head of external affairs for the FSB in Scotland, noted the findings of his organisation’s quarterly surveys as well as the Bank of England figures. He declared that the availability of credit for small businesses in Scotland was “markedly better, albeit from a low base”.
Mr Borland noted that, while 48 per cent of small businesses in Scotland had reported in the third quarter that the availability of credit was poor, this was down from more than 70 per cent in the final three months of 2013.
He added that the FSB’s third-quarter survey had also shown that 37 per cent of Scotland’s small businesses considered that the affordability of credit was poor. But he noted that this was also a significant improvement from the fourth quarter of 2013, when more than 70 per cent of small businesses in Scotland believed credit affordability was poor.
The Bank of England figures also showed that overall bank lending to non-financial companies in the UK rose by a net £2.3 billion in October, which was the largest increase since March.
Howard Archer, chief UK economist at consultancy IHS Global Insight, said: “The marked rise in bank lending to companies in October is reassuring news on the growth front, and ties in with the general evidence that access to capital does not appear to be a problem for most companies, although some smaller, higher-risk companies may have difficulties.”
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