British Business Bank releases Small Business Finance Markets report

Published today, the British Business Bank’s Small Business Finance Markets 2020/21 report highlights a surge in applications for external financial support, including government and local grants, among SMEs – with almost half (45%) of all SMEs surveyed saying they applied for external financial support in 2020, compared to 13% in 2019.

At the same time, gross bank lending (excluding overdrafts) to smaller businesses rose to £104 billion in 2020, 82% higher than in 2019, driven by use of the government loan schemes.

The report contains five key findings:

  • Almost half (45%) of SMEs applied for external financial support in 2020, compared to 13% in 2019. Further significant demand is expected in 2021; 
  • Gross bank lending surged to a record high in 2020, driven by the Bank’s guarantee loan schemes introduced in response to the COVID-19 pandemic; 
  • Equity investment played an important role for innovative companies in 2020 reaching a record high of £8.8 billion, an increase of 9% on 2019; 
  • Greater use of growth-orientated finance will be needed to help the UK achieve its stated aim of building back better; 
  • Finance providers remain well placed to support demand for finance in 2021. 

The report suggests there could be significant further demand for funding throughout 2021 as businesses seek to move on from the pandemic and pivot towards growth, adapt to life outside the EU, improve productivity and transition to a new net zero economy.

Catherine Lewis La Torre, CEO of British Business Bank, said: “This has been an especially challenging period for smaller businesses with external finance playing a vital role in business survival in the face of the COVID-19 pandemic. The British Business Bank has played an important role during the crisis and we will continue to support smaller businesses as they steer a path towards a sustainable recovery.”

A digital version of the full report can be found here.

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