"The Government lending initiatives have been a lifesaver, but they have also tied up the capacity of many lenders."
The volume of Government loans granted to help SMEs through the Covid-19 crisis will have a potentially devastating impact on the availability of ‘traditional’ lending, brokers fear.
New research from Allica Bank suggests that SMEs could be starved of funding to fuel future growth because lending capacity has all been tied up in coronavirus business interruption and bounce back loans (CBILS/BBILS).
In its recent commercial mortgage broker survey, more than eight out of ten (82%) brokers said they have seen a reduction in the supply of finance from business lenders, with more than half (56%) describing the reduction as ‘significant’.
Most of the commercial mortgage brokers surveyed think it is unlikely that banks and non-bank lenders will be able to meet the future needs of SMEs for a range of crucial financial products in 2021, especially commercial mortgages (93% fear lack of availability), unsecured loans (86%), and secured loans (81%).
Allica’s research found that brokers are also concerned about the ability of SMEs to access asset finance this year. Almost three quarters (70%) of the brokers polled said they thought it’s likely that SMEs will be under-served by banks and non-bank lenders for this form of funding.
Nick Baker, head of intermediaries at Allica Bank, said: “The Government lending initiatives have been a lifesaver, but they have also tied up the capacity of many lenders.
“This means they are unable to service the more ‘traditional’ funding needs of businesses not seeking Covid relief, such as those looking to grow. Businesses like this will be central to the UK’s economic recovery, and we need to make sure they have access to adequate funding now to spur long-term growth.”