Lloyds Banking Group to close 166 branches in 2024 and 10 in 2025
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We share regular observations on the key components which influence the quantum, cost and ease of obtaining SME credit.
New lending
- Measure - we track the degree to which credit growth is evident in the market and how that compares with previous periods
- Q4 2023 - new credit granted in the period shrank 5%, which is the same as 6 and 12 months previous, signally a systematic contraction in the market, which is at odds with Large Corporates and Instiutions, which have seen 4% growth over the last 12 months
Last updated: 18/03/2024
Cost of lending
- Measure - we follow the input costs felt across the banking sector and share what that is likely to mean for customers choosing to borrow
- Q4 2023 - Base Rate has stablised at 5.25% over the past 4 months and SONIA has been stable for even longer, albeit still represents a 25% increase on last year and 225% the previous year. With reduced credit supply (above), Net Interest Margins across the banking sector are also expected to increase as Banks proactively price for risk and use price as a means to drive refinance on those customers they don't wish to retain.
Last updated: 18/03/2024
Ease of application process
- Measure - we survey the experience felt by borrowers and advisors when engaging with lenders regarding both new applications and renewals.
- Q4 2023 - Clearing banks SME Credit application success rate is down to below 40% which is 25% lower than the preceding 12-months itself already a level 50% behind the level experienced by Corporates and Institutions who remain insulated.
Last updated: 18/03/2024
Level of default
- Measure - we track the extent to which forbearance (breach of facilities) and losses are being experienced by lenders across the market. This is typically a lagging indicator of market conditions as it is only published by limited sources and most accurately post-financial-year-end of the banks.
- Q4 2023 - secured lending had only seen positive default growth (more companies defaulting) in one quarter out of the previous 6 years before 2023. The year ended with 4 consecutive qtrs of default growth, a trend matched by unsecured lending and consumer credit. When allied with the stability of higher cost of lending and the inherent difficulty in refinancing, we believe SME will continue to find it tough and risk breaching their agreements in the interim.
Last updated: 18/03/2024
Market participants
- Measure - we track new entrants to the market and those providers who cease to lend, close products or leave the market
- Q4 2023 - there were no material new entrants to the SME market in the last quarter but evidence both of contraction in credit supply from incumbents and the failure of a series of SME credit funds to close second/third fund vintages limit supply further - Boost & Co withdrawal from the UK market despite previously having received British Business Bank support is a prime example
Last updated: 18/03/2024
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Understanding your options
- Step 1. Complete your details with us on our short contact form
- Step 2. We will call you back at a time which suits you to discuss your requirements in more detail
- Step 3. We will review your financial & operating records to adequately measure your debt capacity as of now and what that could reasonably look like over time?
- Step 4. We will outline to you and array of products and providers; who comprise in our experience the best potential fit with both your requirements and circumstances
- Step 5. After your options have been explored and the ramifications, pros and cons of each understood, we will take instruction regarding your preferred
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