Allica Bank breaks through £100m in committed loan offers since June

2 mins read

27.10.2020

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Latest research shows worrying funding gap emerging for established SMEs as mainstream banks’ appetite for SME lending declines
  • New SME challenger, Allica Bank, has made £100m of committed loan offers to SMEs since the end of the national lockdown in June – the bank has now issued over £250m of approvals in principle for loans in 2020, with nearly £200m of this coming since June
  • Allica’s national survey of SME finance brokers shows a significant 64% drop in the supply of SME lending outside Government Covid lending schemes
  • Lending outlook weakest for established, mid sized SMEs – latest Bank of England data forecasts SMEs with £1m-£25m turnover to experience a stark 24% fall in credit availability over the next three months

Allica Bank has seen a surge in demand for new business lending since the national lockdown ended, and has just reached the joint milestone of issuing over £250m of approvals in principle in 2020, and over £100m in committed loan offers since June to established SMEs across the UK.   

Allica, the UK’s newest full-service SME challenger bank, which received full UK banking authorisation in late 2019, has received well over £1bn of SME lending enquiries since the end of the national lockdown, with significant demand from established SMEs seeking regular finance outside the Government’s Covid lending schemes. 

The bank is building significant momentum in lending and deposits. Allica has secured over £100m in deposits over the last six months and is now averaging over £25m per month in committed loan offers to established SMEs. 

Allica is seeing increasing evidence that a significant funding gap is opening up for established SMEs who make up a quarter of the economy2 – those typically employing 5-100 employees with annual turnover between £1m-£25m – as mainstream lenders reduce SME lending appetite and non-bank lenders face significant funding pressures.  

  • Allica’s recent survey of UK SME finance brokers has revealed that 64have seen a significant reduction in the supply of business lending following on from the Covid pandemic  
  • Additionally, the survey shows that 99of brokers see declining lending appetite as the biggest challenge in the SME market over the next two years.  
  • Allica’s research is supported by latest figures released by the Bank of England in its Q3 Credit Conditions Survey1, which forecast that established medium-sized SMEs3 will see the sharpest fall in credit availability over the next three months, with a 24% reduction.  

Richard Davies, Chief Executive Officer, Allica Bank, said: 

“The focus for Government and mainstream banks has understandably been on providing support to those businesses most at risk from the impact of Covid-19 

“The reality, however, is that’s led to a sharp fall in available credit outside of the government schemes, and with non-bank lenders unable to step in because of the funding issues they’re facing.     

“Our research confirms that many established businesses, including those less affected by the issues around Covid-19, are seeing lending supply decline sharply, with a sizeable funding gap opening up for established, mid-size SMEs. These companies make up a quarter of the economy and are the very businesses that will help shape the economic recovery but feel they are being forgotten just now.  

Allica is in a strong position to provide that support, and I’m really pleased we’ve already provided business owners with £100m of committed finance since June, and I look forward to growing this support substantially further with our current fundraise. 

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Allica Bank, Broker Survey, September 2020 

Allica Bank is the UK’s newest full-service SME challenger bank, combining leading technology with a brand new network of relationship managers for established small and medium sized firms with annual turnover up to £25m. 

Of the lending Allica has provided to date, the vast majority has been to businesses outside London – 95% of loans by value, and 97% by volume.