British Business Bank – Small Business Finance Markets report 2018/19?>
The British Business Bank has produced its fifth annual British Business Bank Small Business Finance Markets report. It sets out the latest evidence on the ways in which financial markets support smaller business and help them contribute to improving productivity and growth in the UK economy.
Two broad themes provide the background to this year’s report. First, there is evidence that small businesses, due to the current period of uncertainty, are either using external finance to put in place contingency plans or reducing their finance requirements as they delay longer-term investment and expansion decisions.
The second theme is the declining demand for finance. As the latest data in this report shows, the stock of bank lending – which forms the largest part of the market – has continued to decline in real terms although, encouragingly, alternatives to bank lending have continued to grow, albeit at a slower rate than previously.
- Equity deals – at least by value – continue to rise, which is positive for businesses with ambitious growth plans, despite the near absence of the European Investment Fund from the UK market.
- Demand for external finance continues its long-term decline, with just 36% of smaller businesses now using external finance compared to 44% in 2012. Data also suggests applications for new loans and overdrafts are continuing to fall.
- Of most concern for the economic outlook, over 7 in 10 firms say they would rather forgo growth than take on external finance. It is, therefore, encouraging that awareness of alternatives to traditional finance has continued to grow in the past year, with 52% of small businesses aware of peer to peer lending, 70% aware of crowdfunding platforms and 69% aware of Venture Capital (up from 47%, 60% and 62% respectively in the previous year).
- Still, almost half of equity deals are in London despite it accounting for only around 20% of high growth firms
Get the full SMALL BUSINESS FINANCE MARKETS 2018/19 report here.