OVERDRAFTS FALL BY THE WAYSIDE FOR SMALL BUSINESSES
May 24 2016.


The value of lending to small businesses via overdrafts is falling by £100 million a month as small as SME bank overdrafts die out, research finds.


Figures from Funding Options show that at the end of March this year, SMEs were borrowing £12.1 billion in bank overdrafts, compared to nearly £14 billion at the end of September 2014, a fall of 13 per cent.

Over the past five years, the value of bank overdrafts to small businesses has fallen 42 per cent, down from £20.9 billion in April 2011.

Funding Options says that small business overdrafts are now particularly unattractive for banks, which have been reducing this type of lending since the recession.

The company explains that having large amounts of unsecured lending to small businesses on their balance sheets requires banks to retain higher levels of regulatory capital under rules introduced in the wake of the credit crunch.

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