"Gross lending for Q2 was up 50 per cent on the entire annual total in 2019"
UK Finance's latest data on lending to SMEs shows that gross lending of £34.5bn in the second quarter was, in a single quarter, 50% more than the annual total in 2019.
Its figures show that the amount of lending approved in the second quarter was more than five times the amount in Q2 last year and 50% higher than a full year total in normal times.
More than a million businesses had applications approved for finance under Government Covid schemes by the end of June.
Receipts from the Coronavirus Job Retention Scheme, along with business rates suspension and other temporary tax relief measures, reduced operating expenses for businesses and resulted in a 20% increase in deposit holdings since the beginning of the year.
Towards the end of the first quarter, demand for overdraft facilities rose significantly as businesses sought to cover their cashflow but focus in the second quarter moved towards loan facilities, particularly under the government schemes.
Stephen Pegge, managing director of commercial finance at UK Finance, commented: “With lockdown support measures fully operational in the second quarter, our data shows that many companies still had a degree of financial headroom from a combination of existing facilities and deposits, but the demand for additional support was substantial.
“Gross lending for Q2 was up 50 per cent on the entire annual total in 2019, reflecting this significant demand with new overdraft facilities as well as the Government’s business interruption finance schemes providing support.
“The finance industry continues to work closely with government and regulators to deliver the support schemes alongside its usual assistance measures to help viable businesses as they plan for recovery.”