UK’s small business finance market “on road to recovery”

The country’s small business finance market is “returning to health” with net lending to small firms having shown significant growth in 2015, according to the British Business Bank’s second Small Business Finance Markets Report.

Equity finance deals in smaller businesses grew by 43% in the year to October 2015, while peer-to-peer (P2P) lending grew even more dramatically by 75% to £1.62bn over the same period.

2014-2015 also saw four consecutive quarters of positive net bank lending to smaller businesses, which continues to be the most popular form of finance for such businesses.

With more than half (56%) of the UK’s record 5.4 million small businesses hoping to grow their turnover this year, it is vital that finance is suitably accessible to support growth.

The report suggested a number of challenges that need to be met to ensure the small business finance industry continues to improve, including the need for a higher number of scale-up and export businesses to be stimulated to encourage productivity.

It also highlighted the importance of diversity in the small business finance market to drive competition and choice, and the need to address the uneven accessibility of support and finance across every region of the UK.

Keith Morgan, CEO of British Business Bank, commented: “While there are encouraging signs that volumes are up and alternative finance markets are thriving, there remain areas that still require attention.”

Anna Soubry, minster for small susiness, continued:

“Even though the lending landscape is improving, I’m well aware access to finance remains a big issue and want to see even more help for small firms looking to invest and create jobs for people.”