Allica Bank, a UK-based challenger poised to unveil its asset finance division, saw a surge in demand for new business lending on the eve of November, reaching the joint milestone of issuing over £250m of approvals in principle in 2020, and over £100m in committed loan offers since June to established SMEs across the UK.

Allica, which received full UK banking authorisation in late 2019, has received well over £1bn of SME lending enquiries since the end of the national lockdown, with significant demand from established SMEs seeking regular finance outside the Government’s Covid lending schemes, the bank said in a statement.

The lender has secured over £100m in deposits over the last six months and is now averaging over £25m per month in committed loan offers to established SMEs, it said.

Allica is seeing increasing evidence that a significant funding gap is opening up for established SMEs who make up a quarter of the economy – those typically employing 5-100 employees with annual turnover between £1m-£25m – as mainstream lenders reduce SME lending appetite and non-bank lenders face significant funding pressures.

  • Allica’s recent survey of UK SME finance brokers has revealed that 64% have seen a significant reduction in the supply of business lending following on from the Covid pandemic.
  • Additionally, the survey shows that 99% of brokers see declining lending appetite as the biggest challenge in the SME market over the next two years.
  • Allica’s research is supported by latest figures released by the Bank of England in its Q3 Credit Conditions Survey1, which forecast that established medium-sized SMEs3 will see the sharpest fall in credit availability over the next three months, with a 24% reduction.

Richard Davies, Chief Executive Officer, Allica Bank, said: “The focus for Government and mainstream banks has understandably been on providing support to those businesses most at risk from the impact of Covid-19.

“The reality, however, is that’s led to a sharp fall in available credit outside of the government schemes, and with non-bank lenders unable to step in because of the funding issues they’re facing.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

“Our research confirms that many established businesses, including those less affected by the issues around Covid-19, are seeing lending supply decline sharply, with a sizeable funding gap opening up for established, mid-size SMEs. These companies make up a quarter of the economy and are the very businesses that will help shape the economic recovery but feel they are being forgotten just now.

“Allica is in a strong position to provide that support, and I’m really pleased we’ve already provided business owners with £100m of committed finance since June, and I look forward to growing this support substantially further with our current fundraise.”

Of the lending Allica has provided to date, the vast majority has been to businesses outside London, equivalent to 95% of loans by value, and 97% by volume.