TradeRiver responds to Bank of England survey on levels of commercial lending
· Medium-sized businesses are feeling the squeeze as supply of credit fails to meet demand
· 31.5 per cent increase in demand for credit to help support inventory finance
Figures published today by the Bank of England suggest that while lending to small businesses has improved in the last quarter of 2013, not enough funds are being made available to meet a significant increase in demand for credit from medium-sized businesses.
The Bank's 'Credit Conditions Survey' is an insight into the credit supply and demand from both banks and non-bank lenders over the previous quarter and their outlook for the coming three months.(1)
According to the report, demand for credit from medium-sized businesses has increased by 33.7 per cent while the loaned by banks and non-bank lenders has increased by just 0.6 per cent.
TradeRiver, an online funding provider for SMEs, believes that while the focus is to build an economic recovery through encouraging small business growth, sustainable economic recovery can only truly be achieved by helping growing businesses overcome the 'credit hump' – the moment where a successful and growing business needs access to funds in order to expand operations.
Richard Fossett, Chief Executive, TradeRiver Finance, said:
"The credit hump, is an obstacle in the road for companies looking to expand their business. The hump can slow or even prevent companies from achieving their full potential.
"Growing from a medium-sized business is the tipping point at which the company starts to feed back into the economy as export and employment levels start to rise. It is at this point that all the support the business has received in its infancy starts to be reciprocated, to both investors and to the wider economy.
"The report shows that there has been a 31.5 per cent increase in demand for credit to help support inventory finance, which points to the fact that most companies are seeing increased demand and are looking to expand. It is vitally important that over the next year we see more being done to ensure growing businesses do not enter a credit bottleneck".
According to the Bank of England's survey, non-bank lenders could play a vital role over the coming months in injecting more credit into the system, with levels of lending expected to rise.
The report suggests that credit conditions for non-bank lenders continued to ease in Q4, with lenders reporting significant narrowing in lending spreads, significant falls in fees/commissions and a slight increase in maximum credit lines.
"Non-bank lenders have played an important part over the last twelve months in raising the level of available credit. Non-bank lenders are able to step outside the traditional pattern of lending to build terms around the needs of a business, such as a short term injection of cash into the supply chain to help overcome cash flow shortage and satisfy a client order."
TradeRiver Finance is an alternative source of funding for SMEs and has already provided over £20 million of working capital into the market through more than 500 transactions in less than two years.
For further information, please visit TradeRiver Finance's website at: www.traderiverfinance.com.