At the same time, gross bank lending (not including overdrafts) to smaller businesses rose to £103.7bn in 2020, 82% higher than in 2019. This was driven by businesses’ use of government loan schemes such as the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme (BBLS).
The report suggests there could be significant further demand for funding in 2021, as businesses continue to recover from the effects of the pandemic. There are also positive indicators that banks currently look to have sufficient capital and could support further lending.
Catherine Lewis La Torre, CEO of the British Business Bank, said: “This has been an especially challenging period for smaller businesses, with external finance playing a vital role in their 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.”
One significant finding from the British Finance Survey 2020 (slide 22) was that the top-five threats to the future operations of smaller businesses over the next 12 months were as follows:
- Change in market demand arising from the COVID-19 pandemic (31% thought this was a ‘significant obstacle’).
- Changes they need to make to their business to make it ‘COVID-19 compliant’ (18% thought this was a ‘significant obstacle’).
- Cashflow or issues with late payment (13% thought this was a ‘significant obstacle’).
- Access to external finance (9% thought this was a ‘significant obstacle’).
- Issues recruiting and retaining skilled staff (6% thought this was a ‘significant obstacle’).