HSBC launches new regional focused SME lending fund for businesses to thrive

The small and medium-sized enterprises (SME) lending fund is aimed at companies and sole traders that are ineligible for HSBC’s larger loans, with loans starting from just £1,000 per application.

According to HSBC’s research of the small business landscape, almost two-thirds of British SMEs plan to ramp up investment in their businesses during the next 12 months. Almost three-quarters (71%) also anticipate returning to pre-COVID-19 profit levels by the end of next year.

Small Business Minister, Paul Scully, said: “This extra finance from HSBC will help small businesses not only prepare for reopening, but to try new ideas and build back better from the pandemic, complementing the unprecedented support available from the Government.”

HSBC’s new SME lending fund came days after the Chancellor’s Budget 2021 statement, which committed to a new Recovery Loan Scheme, offering Government-backed guarantees on loans or overdrafts worth between £25,000 and £10 million.

In other research by the Bank of England, it revealed that lending to small and medium-sized enterprises during the pandemic has soared, with the British Business Bank PLC stating that 45% of SMEs applied for external funding support in 2020 compared with 13% in 2019. UK Finance, which represents banks, told S&P Global Market Intelligence that 12% of SMEs were actively planning to apply for finance, while a further 23% were expecting to be seek external finance in the coming months.

During the coronavirus pandemic, banks have loaned about £45 billion to small businesses via the 100% state-guaranteed Bounce Back Loan scheme, which allows them to borrow up to £50,000.

The majority of BBLs have been supplied by the larger banks including Lloyds Banking Group PLC, which had loaned £8.4 billion in BBLs at the end of the third quarter of 2020, but that has now increased to more than £9 billion to more than 300,000 small businesses. NatWest Group PLC reported it had loaned £7.9 billion in BBLs at the end of the third quarter but as of the start of February had approved 291,000 applications totaling £8.92 billion. Barclays PLC, which had approved £9.2 billion BBLs at the third quarter, has now approved £10.36 billion to more than 330,000 customers. Before annoucning its new SME lending fund, HSBC Holdings PLC had provided £6.3 billion at the third quarter of 2020.

Karl Sandall, Group Chief Executive Director, at TaxAssist Accountants, firmly believes that more easily accessible and affordable options like the HSBC SME lending fund should be made available to help owners of small businesses manage and repay their liabilities.

Karl said: “Small businesses are the backbone of the British economy and initiatives such as HSBC’s dedicated lending fund will help more to access the finance and support they need to help recover in a post COVID-19 environment.

“I am delighted to see any support to small businesses at this time. We all need small businesses in our lives and this hardworking group of people need all the support they can get to ensure they survive and thrive.”

Date published 12 Mar 2021 | Last updated 17 Mar 2021