Is this the death of the business overdraft?

Added by Love Business East Midlands | 2 April 2014

UPDATED: 4 June 2014

According to the Bank of England, overdraft lending to SMEs fell by £800m in December 2014, the biggest monthly fall in three years – representing 70 per cent of the total fall in business lending.

Massive reduction in the use of SME overdrafts reflects high street banking’s lack of support for SME’s in recent years.

Figures from BRDC Continental's SME Finance Monitor show that overdraft use in Q3 dropped from 25 per cent in 2011 to 21 per cent in 2012 and 16 per cent in 2013.

“The main high street banks have failed to help SME’s and to compound the issues are cutting their SME specialists. It’s no wonder business owners are turning to bridging loans to support them in their times of need. It used to be you could see a bank manager who would take the time to understand your situation and then provide a solution. Now in business you are lucky if you even see your bank manager”.

Gary Poulton, Partner at Redrock Commercial Finance, goes on to say..

" Bridging loans are a popular loan option designed to offer a short term solution to a pressing financial circumstance. As the name suggests, they are primarily used to ‘bridge’ the gap between a debt which must be paid immediately – typically property transactions – and the main line of credit becoming available.

It’s no wonder there has been such an increase in business bridging loans”.

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