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Fears for SME retailers as banks cut lending

Bank lending to small and medium-sized retailers has fallen by 6% since the 2016 Brexit vote, while large retailers have benefitted from a 20% increase in lending.

New figures show that funds lent to SME retailers has dropped from £15.6bn to £14.7bn in the three years, accountants and business advisors, Moore. Funds borrowed by large businesses has increased from £31.5bn to £37.8bn during the same period.

In a statement, accountancy firm Moore said: “The figures suggest that some banks are favouring big businesses, [which] are typically seen as more able to repay any funds borrowed… With big retailers increasing their borrowing so aggressively, that means less finance for smaller retailers.

“As well as needing finance to see them through the current volatile trading conditions, SME retailers also need to invest to ensure their stores and overall offering remain contemporary. Without that investment, smaller retailers risk losing more ground to bigger competitors and to e-commerce.”

It also said smaller-sized businesses need funding to help prevent them from going into administration, with the number of retail insolvencies up 31% from 951 in 2016 to 1,252 on 30 September 2019.

Bridget Culverwell, director at Moore, added: “It is a real worry for smaller retailers if banks are treating them less favourably than larger retailers.

“With the final outcome of Brexit still uncertain, it is expected that banks will continue to be apprehensive to lend to the sector in the months ahead.

“Small retailers are still big employers. They occupy space in high streets where larger retailers are not present and often not interested in being present. If too many small retailers fail, then that leaves those parts of town centres with the highest level of vacant shops even emptier.”

Readers' comments (1)

  • darren hoggett

    Brexit has nothing to do with it.

    Lending to small businesses has changed significantly since the crash of 2008. They are viewed as high risk and from what I'm hearing some banks are purposely avoiding them.

    While I can understand that view, big business is far worse, yet lending has always been favourable to them as the rewards are far higher when it goes right. Trouble is, that rarely happens.

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