Lending to SMEs on the wane

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Lending to small and medium-sized enterprises (SMEs) declined last year, new figures have revealed.

According to data from the Hampshire Trust Bank and Centre for Economics and Business Research (CEBR), lending levels dropped by six per cent - or £2 billion - across Britain's ten major cities between the final quarter of 2014 and the same period of 2015.

London fared better than most, securing the highest amount of funds and a six per cent fall in lending levels. 

But Manchester saw an eight per cent decrease, while lending in Edinburgh fell by nine per cent year-on-year.

Nevertheless, nearly six in ten SMEs across the UK remain confident about their chances of obtaining finance during the coming year.

Mark Sismey-Durrant, chief executive at Hampshire Trust Bank, acknowledged that larger lenders have dominated personal and business banking for too long, which has in turn had a "negative effect on small businesses, which often do not meet the lending criteria".

However, he insisted that SMEs are right to still feel confident about their prospects over the next year.

"There are different finance providers out there, away from the high street banks, which are able to support smaller businesses with their expansion aspirations," Mr Sismey-Durrant commented.

Nina Skero, managing economist at CEBR, added that the decline in lending to small businesses has come about partly as a result of tougher lending criteria.

"Some small businesses that have wanted to borrow have been unable to do so," she observed.

Ms Skero added that this has occurred at a time when other SMEs have reduced their investment intentions.

This, he said, is partly a "consequence of an unstable economic environment".