The U.K. is still feeling the reverberations of last week’s election results, and policymakers and the business community are now waiting to see how a Conservative victory will impact their operations. One matter currently on the table is how lawmakers in Parliament will aid small businesses’ access to working capital as they struggle with getting paid late by their corporate buyers.
Officials have recently implemented new rules that would require mainstream banks to refer SMEs that have been rejected for a loan to alternative lenders, a policy established in acknowledgement of small businesses’ struggle to gain bank financing.
But the U.K.’s largest bank, HSBC, is hitting back at this stigma and against its new alternative lending rivals. According to a Financial Times report released Sunday (May 10), the bank will boost lending to SMEs by 25 percent this year, a goal amounting to more than $12 billion in funding. HSBC has also reportedly vowed to waive some fees on business loans it does grant.
These loans will be spread out across various jurisdictions, with more than $618 million to Scottish SMEs alone, reports said. Its fees that will no longer burden SME borrowers include fund, arrangement and security fees.
HSBC’s plan is likely a reaction to the emergence of alternative lenders and so-called challenger banks across the U.K. as politicians call for greater support of SME financing. But according to reports, the move could also be reflective of an improving environment that supports financing of small businesses.
According to the bank, it has lent 4 percent more this year than the year prior, and across the U.K., lending to SMEs rose by more than $718 million this past March, according to statistics from the Bank of England. The BoE also found that 2015’s first quarter saw a 1.9 percent increase in SME lending overall.
HSBC said that its new proposals are a show of support to U.K. SMEs. “Too often we’ve heard smaller, domestic businesses ask whether we are as committed to them as we are to big global firms,” HSBC’s head of U.K. commercial banking Ian Stuart said.
Prime Minister David Cameron, who secured another five years in office after last Friday’s elections, has positioned himself against a breakup of the major banks across the U.K. but vowed to continue efforts that support SMEs and their ability to access working capital.