Region’s SMEs hit by £3bn funding cut
Big banks reduced lending, says iwoca
THE MAJOR banks have cut lending to SMEs (small and mediumsized enterprises) in Yorkshire by £3bn since 2014, according to a study commissioned by a business lender.
Research conducted on behalf of iwoca concluded that high street banks have significantly reduced SME lending in Yorkshire over the past five years.
The analysis of postcode lending data found that funding to small businesses by the main high street banks fell by 11.2 per cent from 2014 to 2018, a total of £3.2bn.
This is the third largest percentage drop out of all the regions in Britain, with only the North West (16.7 per cent) and the South East (11.3 per cent) witnessing a larger fall, according to iwoca.
SME lending fell by 3.6 per cent in London during these years, the study found.
The five local authorities in Yorkshire which experienced the biggest fall saw a drop of 26 per cent, compared with an average 3 per cent fall for the five areas with the smallest drop.
The biggest drop in SME finance of 29 per cent occurred in Kirklees, West Yorkshire, according to iwoca.
Thirteen out of 15 local authorities in the region saw SME lending fall between 2014 and 2018, with only Rotherham and Barnsley witnessing a rise in business finance, the study said.
The examination of ONS (Office for National Statistics) data also revealed that areas of Yorkshire which have seen a larger fall in SME lending have a higher proportion of households where no adult is employed.
In the five local authorities with the most significant cut in
SME lending, 18.4 per cent of households are workless, compared with 16.8 per cent in areas where finance fell the least.
Christoph Rieche, the chief executive and cofounder of iwoca, said: “SMEs are vital for the health of the economy. Our mission is to give business owners the funding they need so that they can do what they love, and by doing so, creating jobs and supporting communities right across the country.
“It’s therefore concerning that in many parts of Yorkshire, major banks aren’t serving small and micro businesses with the funding required to help them thrive.
“That’s why at iwoca we’re focused on giving small business owners access to the finance they need to drive our economy forward.”
Last month, iwoca announced it would become the first major European fintech firm to open an office in Leeds.
Bosses said they would establish a base in the city, which will serve as its first regional office, because it is a “heartland” for financial services.
Seema Desai, iwoca’s chief operating officer, said: “Leeds has a strong heritage in financial services and banking but we wanted to play a major role in the city’s fintech evolution.
“We looked at several cities and Leeds stood out as a natural second home from where we could support even more small businesses across the UK.”
She added: “We were particularly impressed with the size and quality of Leeds’ talent pool, its strong and improving infrastructure, as well as the city’s own distinctive culture and soul.
“But we remain at the start of our journey – our aim is to fund one million small businesses so we need smart, hands-on people to help us reach this goal.”
Ms Desai added: “We wanted to be able to tap into the rich pool of talent outside London. Leeds is a wonderful city.”
The new Leeds office will eventually accommodate up to 100 employees and be home to iwoca’s growing team of developers.