Gross lending to SMEs up in 2024

2024 lending summary

2024 saw signs of increased lending activity to SMEs by the main high street banks[1]. Gross lending rose by 13 per cent year-on-year to just over £16 billion in 2024.

In each quarter of last year gross lending was up compared to the same quarter in the previous year. However, lending remains significantly below levels reported in the years prior to the pandemic. 

There were notable increases in new lending to agriculture, real estate, health, and recreation, compared with 2023, whereas manufacturing, transport and storage saw falls in gross lending.

Net lending remained negative at around minus £7 billion, showing that businesses continue to pay back more than they borrow.

In an increasingly competitive market, 60 per cent of SME lending now comes from outside of the main high street banks

Loan approvals and overdrafts

2024 also saw an increase in the number of new loans and overdrafts approved to SMEs. Loan approvals increased by 23 per cent year on year to just under 45,000 and overdraft approvals increased by 47 per cent to just under 59,000.

We continue to see little movement in overdraft utilisation. Across all SMEs there was a slight decline at the end of last year, but this remains close to average rates seen over the past three years.

SMEs continue to have a buffer within existing facilities. This hasn’t changed materially since the end of the pandemic.

Invoice finance and asset-based lending

Following a record-breaking 2023, a slightly weaker start to 2024 meant that client sales across the year as a whole totalled £313 billion, slightly less than that of a year ago.

The stock of total advances at the end of 2024 at £21.2 billion was 4.4 per cent up on the same period a year ago and just around £0.5 billion lower than at the end of 2019. This stands in contrast to the gap in activity seen in other lending products across the main high street banks since the end of the pandemic and is a sign of the relative resilience of invoice finance and asset-based lending products.

David Raw, Managing Director for Commercial Finance, said:

“2024 was a more positive year for SMEs, with demand for new finance turning a corner compared to the previous year. Gross lending by the main high street banks was up and we also saw increases in the number of loan and overdraft approval numbers.

“SMEs are the backbone of the UK economy and banks have funding available to support them to invest and grow. We know the economic outlook remains challenging, but lenders are ready to support SMEs with their plans for 2025 and beyond and help them succeed.”

[1] The data is provided by the following institutions:

Great Britain - Barclays, Co-Operative Bank, Lloyds Banking Group, HSBC Bank, RBS Group,  Santander UK, Virgin Money (CYBG).

Northern Ireland - Bank of Ireland, Danske Bank, First Trust and Ulster Bank, plus the SME business of Barclays, HSBC Bank, RBS and Santander UK for Northern Ireland customers.