Large corporates are finding it easier to get credit than smaller businesses, the Bank of England has confirmed.
In its most recent quarterly Credit Conditions Survey, the bank revealed that overall lending to the business sector had remained “flat” between January and March 2015, which is set to continue into the next quarter.
In its report, the Bank said: “In terms of credit availability by firm size, lenders reported that availability for small and medium-sized businesses was unchanged in Q1, but increased for large corporates. In Q2, lenders expected credit availability for small businesses to increase significantly, while credit availability for medium-sized companies and large corporates was expected to be unchanged.”
The survey, which took place between 13 February and 6 March 2015, is part of the Bank’s ongoing work to understand trends and developments in credit conditions.
Lenders are asked about the past three months and the coming three months, covering secured and unsecured lending to non-financial corporations, small businesses and to non-bank financial firms, as well as households.
The survey revealed that that demand for lending by small and medium-sized businesses was unchanged in the first three months of 2015, but increased for large corporates, mirroring the changes in credit availability.
Demand for credit card lending increased significantly among small firms, but fell for secured lending. In Q2, demand for credit was expected to increase significantly from small businesses, and increase from medium-sized companies, but be unchanged from large corporates.
The proportion of loan applications from small businesses being approved was lower between January and March, although it was expected to increase slightly in Q2. Collateral requirements on these loans also increased in Q1, and a further rise is expected in Q2, according to the Bank.