Fast-growing small firms get less bank credit and shorter loans, Bank of England finds

The analysis is descriptive. Its authors say it does not show that banks are lending to the wrong firms. It shows where bank credit goes, and where it does not.

The researchers define a high-growth small firm as one with turnover under £30 million whose headcount grew by more than 20% a year over three years.

Nearly half of these firms are in three sectors. These are information and communications, professional and scientific work, and administrative and support services. In 2024, those sectors took less than 30% of lending to small and medium-sized firms.

Firms in these sectors that do have bank finance borrow less. Their average balances are around 40% lower than in other sectors.

Their loans are shorter too. Average maturities are around 70 months, against 108 months elsewhere. These firms lean more on short-term facilities such as hire purchase, and less on longer-term products such as mortgages.

According to the Bank, much of a high-growth firm's value sits in things that are hard to lend against. Software, data and intellectual property are difficult to pledge as security. Future sales can also be hard to predict.

The Bank also points to a 2023 survey. Among small firms that said they were under-investing, around one in five named limited access to debt on reasonable terms as the main reason.

A bank saying no, or offering a short loan, does not mean the business cannot borrow. It often means the request does not fit that bank's model.

So it pays to look wider. Asset finance can fund equipment against the asset itself. Other lenders may weigh cash flow and contracts more than property.

A broker can look at the deal across a wider range of lenders. If you are planning the next stage, our business growth finance page explains how we can help.

For the wider picture on where small business lending has gone, read our guide on where the money is now.