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Barclays doubles unsecured lending limit for SMEs to GBP 100,000

Tuesday 10 July 2018 | 02:48 PM CET

Barclays bank has doubled its maximum for unsecured business loans for SMEs from GBP 50,000 to GBP 100,000, in a move it says will benefit Scottish businesses.

The bank said it identified more than 40,000 SME clients in the UK, from dentists to manufacturers, that could be eligible for the higher levels of lending, which because it is unsecured could be in their accounts within days.

It said this will help SMEs in Scotland get faster access to finance and seize opportunities they might otherwise miss out on if lending decisions are not made quickly enough. It also means business owners will not have to use their business premises or home as security.

The expansion of unsecured lending adds to Barclays' offering, which lets 250,000 Barclays SME clients see pre-assessed lending limits of up to GBP 25,000 via mobile and online banking, which they can apply for digitally, often receiving the cash that day. More than 40,000 of these businesses have been identified as eligible to apply for up to GBP 100,000.

A new research highlights the importance of access to finance. Barclays’ survey of SME business owners shows how vital speed is in today’s environment, with 11% of those surveyed in Scotland saying they have lost out in the past because they could not get a loan or funding fast enough.

The research also found that almost one in seven of business owners surveyed in Scotland said they would be more likely to apply for a loan if they could get a decision within 24 hours, while 8% said the time it takes to get a loan puts them off applying.

The respondents were also hesitant to offer their home as security, with half of those based in Scotland saying they would be deterred from taking a substantial loan out against their home, and over one quarter saying they would rather pay a slightly higher interest rate than have to use their home as security.

Unsecured lending differs from lending where the loan is secured against assets such as a business premises or the owner’s home. It is far faster for companies as it does not require land or property valuations and other steps that slow the process down.

Applicants for Barclays unsecured lending will typically be able to get a decision within 24 hours, and have the money in their account within five working days.

Barclays said the additional lending could not just help individual companies, but also boost the wider economy. For example, nearly one in five of business owners surveyed in Scotland said that if they were given a GBP 100,000 loan, they would hire more staff.

In addition, Barclays is increasing the maximum unsecured overdraft for business lending from GBP 25,000 to GBP 50,000, helping companies take on larger projects or deal with unexpected increases in business, for example.

When Barclays asked SME business owners what they would do with GBP 100,000 of business lending, the top five answers in Scotland were:

  • Purchase new equipment or machinery: 40%

  • Diversify the business (e.g. open in a new market; add a product/service): 26%

  • Improve or increase branding/marketing: 25%

  • Hiring more staff: 18%

  • New premises: 15%.

More: Link