Copy article

UK Finance Business Finance Review 2024 Q1

ended 17. June 2024

Trade body UK Finance has this morning published its Business Finance
Review 2024 Q1, which can be read in full >> here <<. Key points and summary below. Newspage asked business finance experts for their views, bottom.

  • Gross lending increases again in Q1 to the highest level since 2022 Q4.
  • Most regions see growth in gross lending.
  • Number of finance approvals rises by over a quarter in 2024 Q1, value up by ten per cent.
  • Overdraft utilisation rises to post-pandemic high.
  • SMEs continue to run down deposits and at a faster pace than the previous quarter.
  • Repayments remain stable.

"Our latest data for the start of 2024 is one of the more positive readouts of SME finance than we have seen for some time. Demand uncertainty, cost pressures and rising interest rates have all contributed to suppressing demand for finance, aside from some modest increases in overdraft approvals to manage cashflow.
The turnaround in gross lending, with higher approvals signalling that a further quarter of growth is likely, may indicate that some SMEs are now emerging from survival mode and looking to the future. The broad-based nature of the increase in the flow of finance is also encouraging. In addition, and in line with the data in our Business Finance Reviews over the past two years, SMEs, in aggregate, continue to have a good degree of financial headroom within existing finance facilities and deposits. These are being eroded, but perhaps more gradually than might have been expected given the challenges outlined above. But even on current trends it will take some time before deposit levels or overdraft utilisation return to pre-pandemic norms. Looking to later in the year, and beyond the forthcoming election, a gradually improving economy, the prospect of interest rates starting to come down and the likelihood of more policy clarity at the start of a new parliament will hopefully help to cement a recovery in SME confidence and plans to invest for future growth opportunities."

2 responses from the Newspage community

Copy all

Copy

Editor
David Stirling
Independent Financial Advisor at Mint Wealth
Overall, this readout does offer a positive outlook for business development and expansion later this year. But is it overly positive? We are still in the era of high interest rates and there are no guarantees rates will be coming down this week, even though inflation is now close to target. With the General Election countdown now on, SMEs are still in deep and uncertain waters.
Copy

Ian Hepworth
Director at Funding Solutions UK Limited
As this report suggests, we seem to have reached a tipping point in the economy, with more and more businesses looking towards the future and expansion. Hesitation has been replaced by hope. Many businesses are taking a more positive view and are seeking finance to achieve their goals. I am certainly seeing a lot of growth stories from businesses looking to source working capital for expansion. In recent years, by contrast, it has been more about securing finance for survival and less about growth. The available headroom in existing finance facilities is encouraging. It would suggest that businesses' finance facilities are well structured for their needs. This week is a big one for business. There will be one eye on the inflation data released on Wednesday and then, on Thursday, the Bank of England will make its interest rate decision. A drop in both in inflation and rates could fuel further growth and borrowing.