Interest rate cut: BoE worried by state of business finance market

4 August 2016

Brexit Crunch forces Carney’s hand

Commenting on the Bank of England’s decision to cut interest rates, Conrad Ford, CEO of Funding Options, the online business finance supermarket, says:

“This interest rate cut shows just how worried the Bank of England is about the state of business lending post-Brexit. The Brexit Crunch hasn’t yet shown up in the real economy — this decision must be driven by what the MPC members have seen in indications on lending to businesses.”
“We’ve seen exactly that ourselves. Immediately as the Brexit result was announced, major lenders such as high street banks backed away from deals they would previously have agreed.”
“Worryingly, it’s now showing up in alternative finance, with many funders retrenching. It wasn’t meant to be this way, alternative finance was meant to take the slack when the next credit crunch came.”
“There are still areas of SME finance that remain very competitive. With invoice finance, for example, there is still a wide panel of alternative lenders keen to work with small businesses."

Funding Options points out that figures released last week by the Peer-to-Peer Finance Association (P2PFA) showed net lending growth though P2P platforms fell by 43% in the second quarter of 2016, growing by £174 million compared with £304 million in the first three months of the year.