The economy might be improving but it is still apparent that SMEs are not seeing the full benefits of this, particularly those wishing to pursue faster, more aggressive growth strategies.
According to the Bank of England’s latest Trends in Lending report, the amount of money handed from major banks to small and medium sized businesses has fallen by £400 million in the last quarter. What’s more, the government’s Funding for Lending scheme (FLS) is also failing to benefit larger enterprises, with lending to these firms down £3.9 billion in the three months to the end of September 2014.
The government initiative was designed to help banks offer cheap loans to fuel growth among British businesses amid claims that lenders were reluctant to provide the funds many SMEs were after. The findings of this report suggest that the plan is failing.
The national chairman of the Federation of Small Businesses, John Allan, calls the figures, released on 20 October, "disappointing". He said: "Despite the economy strengthening and the price of credit easing over the past 12 months, these disappointing figures suggest the demand for finance from small businesses is not being met by supply from the banks.”
It is worrying sign that there is a lack of finance available to SMEs through established avenues. Instead these companies are increasingly have to turn to alternative lending options, such as crowdsourcing.
With the economy improving and confidence returning to the vast majority of sectors, businesses are increasingly looking to capitalise on market conditions by pushing for growth. Naturally, a popular approach is to grow inorganically – that is to say, to grow by acquiring other businesses. To do so, a company needs access to capital, which can be difficult to amass even if the business is performing well.
If banks remain unwilling to lends to SMEs – as the Bank of England’s report indicates they are – then they are placing a glass ceiling over the heads of these businesses looking to pursue more aggressive growth strategies. 
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