Bank lending to small – and medium-sized enterprises (SMEs) reached a record high in August.
Figures from the Bank of England show lending to SMEs was up 21.8 per cent last month, the highest rate of growth on record.
Net lending to SMEs grew by £2.2bn in August, the Bank said.
It follows an EY Item Club Interim Bank Lending Forecast last month that predicted business lending to reach a 13-year high this year because of the Covid-19 pandemic.
Mike Bristow, chief executive of CrowdProperty, was unsurprised by the figures, claiming this was because SMEs need to borrow money through the current tough times and the banks are lending more to them through the coronavirus business interruption loan scheme.
“There is more demand from SMEs because they’re struggling as opposed to last year and banks have been supported to lend to them through government schemes,” he said.
The figures also showed net consumer credit borrowing remained positive in August and the mortgage market continued to show signs of recovery.
Net consumer credit borrowing dropped from £1.1bn in July to £300m in August, following net repayments of £3.9bn per month on average between March and June.
The annual growth rate fell slightly to -3.9 per cent, down from -3.7 per cent in July, the lowest since records began in 1994.
Mortgage borrowing rose from £2.9bn in July to £3.1bn in August, although this is still below pre-Covid-19 February levels of £23.7bn.
Additionally, the number of mortgage approvals for house purchases continued increasing, from 66,300 in July to 84,700 in August, the highest number of approvals since October 2007.
“The statistics make sense because the market is recovering and aided by government stimulus such as the stamp duty cut,” said Bristow.
“For me, the question on the residential housing market is at what point does the stimulus stop and at what point does unemployment start to impact transaction volumes which may impact prices?
“I think the stamp duty cut needs to be prolonged and it’s not just in the interest of housebuilders, but the stability of the wider housing market.
“There’s definitely a trend at the moment for measures to be extended so I wouldn’t be surprised if it will be.”