Business lending is a crucial factor for new businesses. Business loans are very common and one of the leading options companies consider when raising finance.

Startup business loans work the same way as business loans but are specifically designed to fund a new business.

Government grants aim to help companies in certain industry sectors or specific areas of the UK. The good thing about grants is that you don’t have to pay the money back, and you keep full ownership of your business.

The Bank of England releases data on small to medium-sized enterprises (SME) loans each month. Analysing this data will give you a clear view of the lending market in the UK.

The business of banking: Why choosing the right bank can make all the difference to your property business

Lending in the UK the Bank of England uses M4 as a broad money supply measure. M4 comprises all notes and coins in circulation, bank and building society deposits, and relatively liquid assets like short-term bonds and commercial paper.

In the UK right now, M4 lending growth is negative. M4 lending growth is currently 4.1% lower than one year ago (June 2022) and 3.2% lower than two years ago (June 2021).

The decline in M4 lending highlights a weakness in the UK’s economic recovery. A negative growth rate in M4 lending suggests a reluctance by banks to lend to the private sector and businesses.

This could be because banks need to improve their balance sheets or because they are pessimistic about prospects for economic growth. Lacklustre economic growth increases the risk of lending to businesses which could struggle in a challenging economic climate.

Business lending in the UK Data from the financial year ending 2022 shows that London was the region that received the most bank lending. The capital received 17,281 SME loans valued at £4.44 billion from2021 to 2022. This is a whopping 23.63% of the total value of SME loans approved across the whole of the UK (£18.8 billion).

The South West received £2.09 billion in SME funding, followed by the North West with£1.74 billion.

Wales received the lowest value of SME loans at just £91 million, followed by the North East with £761 million. SME loans include business loans, start-up loans, and business start-up grants.