Commercial brokers have expressed fear that traditional lending to small- and medium-sized enterprises (SMEs) will drop substantially as a result of the volume of emergency loans provided.
Allica Bank’s commercial mortgage broker survey has found that more than eight out of 10 (82 per cent) brokers said they have seen a reduction in the supply of finance from business lenders, with more than half (56 per cent) labelling this as significant.
The majority of the commercial mortgage brokers surveyed think it is unlikely that banks and non-bank lenders will be able to meet the future needs of SMEs for a range of crucial financial products in 2021.
93 per cent of these brokers fear the future for commercial mortgages, 86 per cent are concerned for unsecured loans and 81 per cent are worried about secured loans.
Furthermore, almost three quarters (70 per cent) of the brokers said they thought it’s likely that SMEs will be underserved by banks and non-bank lenders for asset finance.
Nick Baker, head of intermediaries at Allica Bank, said the forecasted drop in lending will severely harm businesses’ efforts to recover from the pandemic.
“The government lending initiatives have been a lifesaver, but they have also tied up the capacity of many lenders,” he said.
“This means they are unable to service the more ‘traditional’ funding needs of businesses not seeking Covid relief, such as those looking to grow.
“Businesses like this will be central to the UK’s economic recovery, and we need to make sure they have access to adequate funding now to spur long-term growth.”