Big banks have been pulling funding for small businesses across the North East, according to new analysis.
Lending to small and medium enterprises (SMEs) in the region fell by 10.8% between 2014 and 2018, according to business lender iwoca.
Within the North East LEP region, Sunderland suffered the largest percentage fall, with lending down 32%. Newcastle’s 14% reduction amounted to £52m while County Durham saw a fall £103m (22%). The North East suffered the third greatest contraction in business lending, iwoca said, behind the North West and the South East. London got off lighter than any other region, with a 3% drop in funding, while Westminster saw the sharpest rise in the capital with a 41.3% boost in lending.
READ MORE: {}
Iwoca chief executive Christoph Rieche said: “It’s concerning that, in many parts of the country, major banks aren’t serving small and microbusinesses with the funding required to help them thrive.
“SMEs are vital for the health of the economy.”
Iwoca said that reduced business lending tended to be in poorer areas of the country.
The company looked at ONS wage data which showed that the average weekly salary in the 20 local authorities worst hit by the drop in lending was £488. In these areas SME financing fell by an average of nearly 35% over five years.
At the opposite side of the spectrum, people earned £529 a week in areas where lending increased at the fastest rate - a difference of more than £2,100 a year.
Most Read
However, despite a drop in small business loans, the data showed that lending to individuals has increased across England. In the most deprived areas, personal lending has risen by 15%, and in the wealthiest it has increased by 22%.
Small Business Minister Kelly Tolhurst said: “We’re backing businesses right across the country. £7bn from the Government-owned British Business Bank is supporting over 91,000 SMEs, the majority outside London and the South East and our Northern Powerhouse Investment Fund has invested over £135m in smaller businesses across the North of England.
“But we are determined to do more to level up across the country.”