By Andrew Moorhouse
There are a number of sources that provide information on data on lending to and credit conditions for small and medium-sized enterprises (SMEs). This article presents a summary of the known available data on measures of lending to UK SMEs. Table 1 at the end of this article lists where these data can be found. Tables 2 and 3 contain more detail about some of these data sets.
Quantitative lending data
The Bank of England publishes a number of series on bank and building society lending to UK non-financial businesses. This includes a split of gross lending, repayments and overdraft balances by business size; SMEs and large businesses. These are published on a monthly frequency in Bankstats Table A8.1 and in Tables M and N of the Bank of England’s Money and Credit statistical release. These data are available from April 2011.
The Bank is not the only institution that publishes data on SME lending volumes. The British Bankers’ Association (BBA) publish monthly data on a quarterly basis from a panel of lenders covering the provision of credit to SMEs from July 2011. These data include lending with regional and industry breakdowns. Deposit balances are also published.
There are certain definitional differences between the Bank and BBA data sets that make these data not directly comparable. For example, there are differences in the reporting population (Bank data are from all banks and building societies while the BBA data are sourced from a panel of lenders), and in geographical coverage (BBA data cover Great Britain, rather than the UK, so do not include lending to SMEs in Northern Ireland).
Gross flows of other types of external finance to SMEs, such as asset finance and peer-to-peer lending, are small compared to bank lending but are growing.Estimates of some other types of external finance for UK SMEs can be found in the Small Business Finance Markets 2014 report published by the British Business Bank. The British Business Bank is a Government-owned financial institution whose goal is to change the structure of finance markets for smaller businesses, so these markets work more effectively and dynamically.
All these data are published at an aggregated level for either all banks or building societies or a group of lenders. There are also some SME lending data available by individual institution. In addition to their quarterly publication highlighted above, the BBA publish aggregated SME lending data by participating lenders across more than 8,000 postcode sectors. As part of it, they provide links to the participating lenders published data relating to their own customers’ borrowing by postcode sector.
Data on lending to SMEs is reported by participants in the Funding for Lending Scheme Extension. A condition of the Scheme has been that the Bank will publish the details of participants' quarterly certified net lending flows to UK businesses, including a breakdown of net lending to SMEs. These data are available quarterly from 2014 Q1. Cumulative net flows for Q2-Q4 2013 are also available.
In addition to lending volumes, the Bank of England publishes data on the price of lending to SMEs. One source is the monthly collection by the Department for Business, Innovation and Skills (BIS) of data on new and renewed variable-rate credit facilities to SMEs by four major UK lenders. These are regularly published by the Bank of England in Trends in Lending and available from November 2008. Another source relevant to the price of business lending is the Bank's monthly effective interest rates data set. This includes the effective rate on new corporate lending for advances of £1 million or less, which may provide an indicator of pricing on lending to smaller businesses. These data are available from January 2004.
In interpreting such data, it should be noted that the measured rates that SMEs face on new borrowing can vary widely, taking into account various business-specific risk and credit quality factors. As a result there is no single definitive measure of loan pricing; statistical and survey data can provide broad estimates, but these may not entirely reflect the true cost of credit faced by SMEs.
In addition to quantitative data, qualitative data from a number of sources can also provide an indication of credit conditions for SMEs. The Bank of England’s quarterly Credit Conditions Survey provides responses from bank and building society lenders on issues pertaining to credit demand, availability and pricing over the past three months and coming three months for both small and medium-sized businesses.
The monthly Agents’ Summary of Business Conditions covers intelligence on business conditions, including those faced by smaller businesses. This publication is a summary of monthly reports compiled by the Bank of England's network of Agents, following discussions with around 700 businesses of all sizes.
There are other regular surveys, such as the quarterly SME Finance Monitor, the Federation of Small Businesses’ Voice of Small Business Index, and the annual BIS SME Business Barometer which provide data on access to finance and business confidence from the perspective of the businesses.
Changes to future Bank data collections
Looking ahead, the Bank is planning to collect additional detail on lending by business size. Data on gross lending, repayments, loan amounts outstanding and balance of overdrafts will be collected by industry and by business size (SMEs and large). Additionally, under the changes for the Effective Interest Rates data series, pricing data will be collected by business size rather than loan size, and will include a split for SMEs.
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