Construction sector hardest hit by reduction in lending to small businesses
The Construction sector represents a fifth of all small businesses operating in the UK with 891,000 businesses in the sector. The construction sector is also absolutely critical to meeting the shortage in housing in the UK where current forecasts indicate a shortage of 1 million homes by 2022.
Despite this, the latest available data from the Bank of England shows that small businesses in the construction sector only received 7% of bank loans that were granted to small businesses in total in 2013. More worryingly, this had fallen from 10% of total loans that the sector was granted in 2011.
The severe lack of availability for finance for small businesses in the construction sector is born out by Platform Black’s own proprietary data, which shows that small businesses in the Construction sector represented far and away the greatest proportion of businesses using Platform Black in order to finance their operations. In fact, the Construction sector accounts for almost 50% of all the money advanced to small businesses since Platform Black has been in operation.
Jonathan Forbes-Brown, Managing Director of Imperial Waterproofing Systems Limited, a fast-growing Essex-based construction company, said: “We’ve been established since 1993 and have installed our new technology roofing systems on some of the most prestigious projects, including Wembley Arena and Stevenage Bioscience, and across a broad spectrum of other commercial and public bodies. The banks have been retrenching from lending to the Construction sector for a number of years - HSBC to name but one - and we had been searching tirelessly for a way to finance our growth. We moved to Metro Bank Plc, and became a member of Platform Black to ensure we could fund our growth. We have now financed over £1 million of invoices via Platform Black - which has meant that we can continue our exciting growth trajectory. We are a most satisfied customer.”
Louise Beaumont, co-founder of Platform Black, commented: “The reality is that construction is critical to our economy. Current predictions are that there will be a shortfall of one million homes by 2022 — the people who build these houses are the construction firms. Not only that, but without smaller businesses in the construction sector receiving the funding they need to operate, the Government’s planned £375 billion of infrastructure spending will be left dead in the water.”
Source: Federation of Small Businesses
Source: Bank of England ‘Trends in Lending’ 2013
Source - Platform Black press release