SMEs have reduced their debt by £4.4bn in 2024, following almost 3 years of falling debt since the pandemic’s huge impact. But the last quarter of 2024 saw the first uptick in SME loans since Q4 2020. This suggests that businesses might be looking for credit to invest and grow again, with lenders, especially challenger and specialist banks, becoming more willing to lend. What do you think of this shift? Any thoughts on whether this is a good sign for SMEs or just temporary relief?
I’ve been seeing some of this too. A lot of businesses are starting to get more confident with borrowing again. Could be a good sign for growth, but still feels risky with how much debt they already have.
@Val
Yeah, the debt they piled up during Covid is crazy. But with rates going down now, it might make sense to invest, right?
Ollie said:
@Val
Yeah, the debt they piled up during Covid is crazy. But with rates going down now, it might make sense to invest, right?
I guess so, but with the global uncertainty and costs rising, isn’t there a risk of adding more debt now? Or maybe the lower rates will balance that out? Not sure…
I read somewhere that the government loan schemes helped a lot during the pandemic, but not many businesses have repaid those loans yet. What happens when those payments catch up with them?
Jamie said:
I read somewhere that the government loan schemes helped a lot during the pandemic, but not many businesses have repaid those loans yet. What happens when those payments catch up with them?
That’s a big issue. A lot of companies are still juggling debt from those loan schemes, and with higher costs, it’s hard to keep up. I think it’ll be a tough year ahead for many SMEs.
@Darby
Yeah, definitely. They need to have good strategies in place to manage that debt, especially with all the economic uncertainty going on.
It’s good to see SMEs getting back into borrowing to invest, but are they really in a stable position to do so? A lot of businesses are still recovering from the pandemic.
Keaton said:
It’s good to see SMEs getting back into borrowing to invest, but are they really in a stable position to do so? A lot of businesses are still recovering from the pandemic.
True, it’s like a balancing act. They need to stay flexible and have good financial tools to avoid getting caught off guard by any surprises.
Is anyone else worried about how Trump’s policies are going to impact operational costs? That’s another hurdle for SMEs that are already struggling.
Morgan said:
Is anyone else worried about how Trump’s policies are going to impact operational costs? That’s another hurdle for SMEs that are already struggling.
Definitely a worry. With all the global instability, it’s hard to predict what’ll happen. SMEs need to be ready to adapt quickly.
Interesting that lending is rising after the rate cuts in 2024. Do you think this trend will continue through 2025?
Freddie said:
Interesting that lending is rising after the rate cuts in 2024. Do you think this trend will continue through 2025?
Hard to say. If rates stay lower and businesses feel more confident, it could keep going up. But I’m not sure how long that will last.