Gross lending to SMEs in the first three quarters of 2020 reached £54bn and amounted to more than double the annual total for 2019, new UK Finance data has revealed.

The value of lending in the second and third quarters was £36bn higher than during the same period of 2019 – driven by continued uptake of government-backed support.

The banking body’s data revealed that for every 1,000 businesses, UK lenders have issued 229 loans through the Bounce Back Loan Scheme (BBLS), and 10 facilities through the Coronavirus Business Interruption Loan Scheme (CBILS).

UK Finance revealed the number of loans had “dwarfed” volumes seen in previous years, as lenders met the increased demand for additional finance.

Support through government-backed coronavirus lending schemes, coupled with initiatives such as the Job Retention Scheme and the deferral of VAT payments, has significantly reduced SME outgoings in 2020. The UK Finance data showed a 20% rise in business deposit holdings over the first three quarters of the year – which now stand at a record £252bn.

UK Finance managing director of commercial finance, Stephen Pegge, said: “While the business community in aggregate does not appear over-indebted, with liquidity reserves and capacity to provide finance strong overall, many individual businesses and some specific sectors are facing significant and much more extended disruption and may find themselves in financial difficulty in 2021.

“In addition to the further grant support announced this week, widespread restructuring and recovery situations are expected. In response, the finance sector and related professional services are focused on the provision of capacity and expertise to help support the turnaround of companies where possible, while ensuring the sympathetic treatment of those businesses which are no longer viable.”

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