Big banks under fire over loans

Big banks are pulling funding for small businesses in some of the poorest regions of England, according to new analysis.

Research by iwoca, one of Europe’s largest business lenders, reveals that finance for SMEs in Sunderland fell by £234m in the five years between 2014 to 2018.

Iwoca chief executive Christoph Rieche said: "It's concerning that, in many parts of the country, major banks aren't serving small and micro businesses with the funding required to help them thrive.

"SMEs are vital for the health of the economy." The research found: *SME lending in Sunderland fell by 31.8% from 2014 to 2018 - the fourth largest drop in the North East

*During this period, Sunderland lost one quarter of its bank branches

*Every local authority in the North East saw a drop in SME lending, totalling £1.3 billion.

*North Tyneside saw the smallest drop of 5.8%.

*Lending across the North East fell by 10.4% – the fourth largest reduction out of all regions in Great Britain.

The fall in SME finance also comes as Sunderland had the second lowest average wages between 2014 and 2018 in the region. ONS figures show that the average weekly salary of workers in the city was £445 – below the regional average of £467.

While major banks have reduced their lending to SMEs, iwoca says it has increased the levels of finance made available to businesses.

From 2016 to 2018 iwoca approved £2.7m funding for small businesses in the area, including £1.8m in 2018.