Letters: Weaning off Covid-19 cash
[Re: Small business lending tumbles amid strong economic rebound, March 14]
UK Finance data shows strong economic recovery from the pandemic led to borrowing among small businesses falling off a cliff last year. However, we observed a 58 per cent year-on-year increase in SMEs seeking finance in January 2022, demonstrating a rebound in activity and the importance of the alternative lending market as SMEs prepare to move away from reliance on Government backed schemes as the end of the Recovery Loan Scheme (RLS) approaches.
With the scale of potential fraud as high as £6bn, the use of the emergency loan schemes has been scrutinised heavily. Beyond this, restricted access to the Term Funding Scheme remains the single biggest issue for alternative lenders, depriving them of the advantageous Bank of England credit terms afforded to mainstream banks.
Nevertheless, the government loan schemes have accelerated a change in SME expectations, moving the process online and enabling businesses to access substantially lower interest rates.
As the UK weans off these schemes, it has demonstrated the opportunity and need for a strong and thriving alternative finance community to bridge the gap.