Bank of England report reflects businesses’ switch away from traditional banking sources, says FSB

The Bank of England’s (BoE) Funding for Lending figures, published today, show a £0.8 billion net decrease in lending to small businesses in the fourth quarter of 2014.

Gordon Millward, Regional Chairman of the Federation of Small Businesses (FSB) said:

“These figures suggest that while we have seen some positive signs recently, credit conditions remain challenging for smaller companies. Evidence shows that rather than turn to their banks, they are increasingly using their own resources to meet their financing needs and paying down their debts rather than increasing them. And though a small part of the market, growth in alternative lenders such as ‘peer to peer’ lenders has provided further sources of finance away from traditional bank sources.

“The key continues to be making this market more competitive and contestable, enabling new entrants to introduce innovative approaches and provide alternative finance solutions. Long-term support for the British Business Bank is important too, to fill in finance gaps and encouraging the growth of alternative, non-bank providers.”