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Gross lending to SMEs stood at £4.8bn in the final quarter of 2022, according to data published by UK Finance.

The data, released as part of the latest Business Finance Review, found that the figure for Q4 was broadly unchanged from previous quarter and totalled £22.6bn for the whole of 2021.

Applications for new loans and overdrafts stabilised in the final quarter of the year.

Invoice finance and asset-based lending advances increased by five per cent on the quarter.

The value of repayments edged down on the quarter but remain above pre-pandemic levels and were 38 per cent higher in 2021, compared with the previous year.

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Stephen Pegge, managing director of commercial finance at UK Finance, said: “2021 was another rollercoaster year for SMEs, right to the end. Encouragingly, we have seen the economy recover back to pre-pandemic levels, though some sectors still have a way to go to close the gap.

“Despite the ups and downs of the past year, SMEs’ approach to financial management has been steady. Demand for additional loan finance has stabilised closer to levels seen prior to the pandemic and the value of new lending held up in the final months of 2021. There are signs that alternative forms of finance, such as invoice finance and asset-based lending, have turned a corner in terms of increased demand.

“A good degree of financial flexibility remains. SMEs continue to be able to draw on significant accumulated deposits and have access to unutilised arranged facilities, such as overdrafts, invoice finance and asset-based lending. Meanwhile repayment of the additional finance accessed during the pandemic continues.

“While SMEs will be hoping for more stability this year, a number of challenges will linger, and the finance industry is conscious that these can affect sectors differently. Finance solutions are there for SMEs looking to restart investment plans, boost their working capital or fill a gap if the recovery hits another bump in the road.”

By Stephen Farrell

Source: Insider Media

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