Small Business Finance Markets report – published from British Business Bank
Published this week, the British Business Bank’s Small Business Finance Markets 2022/23 report shows £35.5bn of bank lending came from challenger and specialist banks in 2022
This exceeded lending by the major banks during the period, giving challenger and specialist banks a 55% share of the market. Gross bank lending increased by 12.8% in 2022, however net lending fell by £8.5bn in large part reflecting repayment of Covid loans.
The report reveals the smaller business asset finance market also reached a record level in 2022 with an increase in new business of 11% in 2022 to £22.1bn. This was driven in part by some easing of supply chain shortages and by rising asset prices.
Innovation required to boost productivity and economic growth
The report reinforces the importance of innovation in order to scale up UK productivity rates and encourage economic growth in a challenging macro-economic climate. The UK is ranked second in the G7 for our innovation environment by the Global Innovation Index, but the UK ranks fifth in the G7 nations in terms of the proportion of its smaller businesses that are innovative. The UK would require around 440k more innovative smaller businesses to meet the G7 average.
Innovative businesses are more likely to use some form of external finance (65% vs 58% of non-innovators). Smaller businesses seeking finance to innovate are also reported to be using a wide range of finance products, with many smaller businesses opting for grant finance, asset finance or bank overdrafts to help them develop and adopt innovative products and processes.
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More about British Business Bank
British Business Bank is the UK’s economic development bank. It is the centre of expertise on smaller business finance in the UK, providing advice and support to the Government and equipping smaller businesses with independent and impartial information on their finance options.
This blog is one of a series of articles from our partners. The views expressed are those of the author and not necessarily those of ICAS.