Business growth stalled by slow bank lending warns market leader

Latest ONS data shows increase of only 0.3 per cent in UK GDP for Q1 2017, the slowest rate of growth since Q1 2016.

The market leader in secured bank lending to wealthy clients has warned that the banking industry must improve speed of access to finance for business owners, or risk a continued slowdown in business investment.

The comment comes as the ONS releases its quarterly GDP data.

According to the latest preliminary data released Friday (28 April), UK gross domestic product (GDP) was estimated to have increased by 0.3 per cent in Q1 (Jan to Mar) 2017, the slowest rate of growth since Quarter 1 2016. Retailers, hotels and restaurants all suffered falling growth after being forced to hike prices due to higher input costs (due to a fall in sterling after the EU referendum).

Paul Aitken, CEO of Borro, has warned that business owners are missing out on growth due to the slow pace of lending.

‘Bank lending speeds have remained static despite improvements in technology, consumer credit checks and a steadier market. If the industry is serious about supporting business growth in the UK, it’s critical lending speeds are improved. We know business owners are missing out on opportunities to expand purely due to lack of available cash.’

Borro provides secured asset-backed loans of £5,000 to £5 million against property, cars and artwork within 24 hours.

Most (80 per cent) of its clients are business owners, who require access to cash to fund investment opportunities or expand business ventures.

Recent data as shown that 19 per cent of UK SMEs have missed at least one new business opportunity in the past 12 months due to a lack of available finance, resulting in an average cost of £77,651 per business.

Data from Experian also highlights that 30 per cent of business owners state speed as a direct reason for looking at alternative finance as opposed to mainstream lenders in 2016, up from just 6 per cent in 2015.

‘The average bridging completion time in the UK is 48 days, whereas we can provide loans against property in three days, some within 24 hours. There’s no reason the banking industry can’t improve its valuation methods to offer a better service for its customers, especially business owners in need of a quick turnaround so investment decisions can be made,’ continues Aitken.

Three quarters (75 per cent) of luxury asset loans through Borro are completed in under 24 hours using technology-backed valuation methods, versus timescales of 30+ days for asset backed loans through private banks.

Borro forecast a 30 per cent growth for 2017 as asset based finance increasingly takes market share from bank overdrafts as a key source of funding for SMEs.

According to data from the Asset Based Finance Association, the value of small business asset based finance increased by three per cent in 2016, while SME overdrafts were down by two per cent.