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BoE Credit Conditions data Q4 for SMEs

ended 19. January 2023

Tomorrow (Thursday morning) at 09:30, the Bank of England is publishing its quarterly Credit Conditions report for Q4 of last year, showing, among other things, the availability of loans to businesses and the demand for loans from businesses. To get a feel for it, you can see the Q3 data >>here<<. Clearly this data will reflect the carnage that ensued after the mini-Budget. Selection of Qs:

  • Did the supply of loans available to businesses weaken during Q4, and why? Are commercial lenders battening down the hatches?
  • What happened to SME demand for business loans in Q4? And how's demand been this year so far?
  • What happened to business loan pricing in Q4 and how has that changed in 2023 to date?
  • Did you see a rise in businesses defaulting in Q4 of last year and do you expect the number of businesses defaulting to rise in 2023? 

2 responses from the Newspage community

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Mark Grant
Business Finance Adviser at The Business Finance Branch
SME credit conditions in 2022 started with a dramatic improvement after the Covid period, but the green light quickly switched to red alert after the disaster that was the mini-Budget. Reduced supply of corporate loans was led by the larger lenders, which soon fed down to smaller lenders. As appetite for risk reduced, loan rates and margins increased, and we start 2023 in much the same place. SME loans are still available but the less security available to the lender, the higher cost of funding to the corporate. In short, the cost of business finance is going up. Demand from SMEs is increasing currently for cash flow funding. We suggest clients leverage tangible assets where viable as loan security to reduce lenders' risk and therefore their funding costs. Examples are property, invoices or vehicles and machinery.
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Ian Hepworth
Director at Funding Solutions UK Limited
The availability of business loans reduced dramatically following the mini-Budget, as credit conditions tightened and lenders took stock. Equally, many business loan providers cannibalised their own future market when providing government-backed loans during the pandemic. Businesses seeking funding are now having to look beyond traditional loans and overdrafts. By using more specialist products such as invoice finance, trade finance and asset finance, many are still raise the funding they so desperately need.