The performance and development of small businesses has declined to its lowest level since 2014 as firms struggle with a lack of confidence and lending, new figures show.
Figures from Yorkshire Bank owner CYBG show a fall in its SME Health Check Index for fifth successive quarter, suggesting a worsening business and macroeconomic environment since the EU Referendum in June 2016 and the ongoing Brexit negotiations.
Across the UK, the Index dropped to a score of 42.02 but, more encouragingly, UK Finance data published at the end of February showed lending to UK SMEs has stabilised in the final quarter of 2017, but firms delaying investment decisions remains a concern.
In Yorkshire, the score for lending declined from 31 to ten over the quarter, although there were two positive indicators: the measure for share of SMEs operating at full capacity was up five points, and general business confidence was up, from 55 to 68 points.
When specifically asked about the “main barriers” to scaling up their businesses, a fifth of Yorkshire SMEs in the region cited access to finance as a barrier.
Yorkshire Bank’s research also showed that among UK SMEs who would like to borrow on average £100,000 each over the next six to 12 months, almost a half want to use that money to hire new staff and a third wish to plough it into their working capital.
Interestingly, 28 per cent of SMEs plan to make acquisitions with the help of the money they borrow.
Yorkshire Bank published the data at the same time as revealing it had lent £305m to Yorkshire’s SMEs, £5m ahead of the bank’s target for 2017.
The bank has made a well-publicised pledge to lend small firms £900m by 2019.
Nationally the CYBG group loaned more than £2bn to the UK’s small and medium sized businesses.
Gavin Opperman, group customer banking director with CYBG, said: “We all know SMEs feel it’s more difficult to get access to finance these days and in the current economic environment, small firms are long overdue a confidence boost.
“I’m delighted we have more than matched the first year of our commitment to lend SMEs £6bn over three years, with well over £2bn distributed to them across the UK in 2017 alone.
“As the UK’s leading SME challenger bank and a regional economic champion, I’m especially pleased we have met or surpassed all our regional commitments in the Midlands, North of England and Scotland.
“Through this programme, CYBG will continue to support the innovation, creativity and growth plans of the nation’s small and medium sized enterprises.”
Paul Wainwright, head of customer banking in Sheffield, said: “We are delighted to be supporting SMEs in Yorkshire with this significant focus on SME lending.
“Expanding in Yorkshire is a natural extension of our existing business – it’s a market that’s growing significantly.
“Given our heritage in the region, these lending figures are another hugely exciting milestone on this journey.”
In February 2018, Clydesdale and Yorkshire Bank provided an over £20 million finance package for Whirlwind Renewables, a Huddersfield-based wind energy company, specialising in onshore projects.
The funding package is supporting its growth strategy and work will begin shortly on its latest project, Achlachan Wind Farm, which will be built in the Scottish Highlands.
Last year Yorkshire Bank did a deal with fintech firm Ezbob to reduce its credit application process for small firms from weeks to hours.
The deal sees the bank combine its algorithms and pricing paired with Ezbob’s technology.