Research by iwoca, a small business lender, reveals that high street banks have significantly cut back on SME lending in the poorest areas of England.
The news, revealed by one of Europe’s largest small business lenders, highlighted that small businesses in the North West saw the largest reduction in lending of 16%, whilst London had the smallest fall in SME lending out of all British regions at just 3%.
It is believed that the decline in funding is due to the mass closures of various bank branches across the UK. Figures revealed by consumer advice provider Which? highlighted that between 2015 and 2019, a total of 3,312 branches closed, averaging at 55 closings each month.
In addition to this, banks have been hesitant to give funding to businesses in some of the UK’s most economically deprived areas.
Christoph Rieche, CEO and co-founder of iwoca commented: “SMEs are vital for the health of the economy it’s, therefore, concerning that in many parts of the country, major banks aren’t serving small and microbusinesses with the funding required to help them thrive.”
The study, conducted over a five year period, showed that across Great Britain funding fell by 8%.
In Blackpool, (the country’s most deprived area according to the government’s index of deprivation), lending fell by 27.6%. In the 20 areas which saw the largest reductions in business lending, SME finance fell by an average of 36.8% over these five years.
However, areas that are less economically challenged saw a funding increase. In Wokingham, (the least deprived area of the country), saw a loan increase of 18.2%.
By Glorious Author!