Banking support for the small business sector flourishes

More than half a million new banking relationships are set up for small businesses every year, the British Bankers’ Association has revealed.

Figures also show that nearly half of all small businesses are now banking online.

Banks’ support for the small business sector is demonstrated by figures at end-2006:

Term lending of £37.2bn, having grown 8% over the year.

Overdraft borrowing totalling £8.8bn. Overdrafts fell marginally (by 2%) over the year, reflecting the reduced dependence on this type of cash flow finance.

Deposit levels of £46.4bn, an increase of 11% over the year.

During 2006, over 590,000 small businesses established new banking relationships.

5% of small businesses operate their accounts online.

Commenting on the latest figures, BBA director of statistics, David Dooks, said: "Banking services are important for small firms and for the UK economy. In 2006, the liquidity of the 3 million firms in the small business sector was particularly strong, as their deposits grew and their use of overdraft borrowing reduced marginally. At the same time, small firms’ structured term borrowing to fund investment showed healthy growth."