Lending figures published today by the Bank of England, shows gross new lending to businesses of £47.3 billion for the first three months of 2011.
Within the overall total, first quarter lending to SMEs was £16.8 billion, very nearly matching the 'stretched' lending intentions underpinning the Merlin agreement but the available capacity was not fully taken up which the Merlin banks put down to muted demand.
The Merlin banks said that while in line with expectations, SME lending demand reflects the relatively slow growth in demand for goods and services in the economy as a whole at present. The April CBI survey of SME expansion intention highlighted this issue, with 69% of SMEs citing order levels as their number one concern. Only 8% of SMEs cited finance as a concern, reflecting the efforts that the banks have made in honouring their Merlin commitments and raising business confidence as to the availability of finance once economic demand recovers.
A spokesman for the Merlin banks said: "These numbers demonstrate the determination of the Merlin banks to lend to viable businesses - it has been a solid start to the year.
“Demand in some sectors, particularly among SMEs, remains muted, but we are devoting considerable time, effort and resource, particularly through the Better Business Finance initiatives, to ensure that we help viable businesses to access finance.
“Nonetheless, economic conditions remain challenging, and demand for lending is likely to vary through the year. So whilst these numbers are encouraging, it is too early to draw conclusions as to the year-end outcome."
