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Metro Bank accelerates SME lending as banks abandon micro businesses and focus on larger SMEs

21st July 2011

43% of larger businesses have access to a business banking manager, compared to only 16% of micro SMEs
Larger businesses are more likely to request and be granted a loan (29%) than micro businesses (2%)
11% of micro businesses state that they have a good relationship with their bank, as opposed to over double that (but still only 23%) of larger SMEs
Only 19% of recent loan requests from micro businesses look for over £50k, compared to 92% of requests from larger SMEs

British ‘micro businesses’ are being let down by their business banks, according to a new research report amongst UK SMEs from Metro Bank. While 43% of larger SMEs (with between 50 and 250 employees) have regular access to a business banking manager, only 16% of micro businesses (under 10 employees) are given this support.

The report, which interviewed over 500 SME banking decision makers, revealed that not only are micro businesses less likely to be given the support and advice of a business adviser, micro businesses are also substantially less likely to successfully request a business loan. 29% of larger businesses have applied and been granted a loan in the last 12 months – as opposed to a tiny 2% of micro businesses. This is despite micro businesses requesting significantly smaller amounts of money from their bank. Today’s research shows that only 19% of recent loan applications from micro businesses have been over £50,000, contrasted to the fact that almost all (92%) of larger SME loans request more than £50,000.

Larger businesses are more likely to request large amounts of money, but they are also far more likely to have the confidence to request money at all. Only 7% of micro businesses have turned to their banks for a loan in the last 12 months, with five times as many larger businesses (34%) searching for funding for their organisation.

This two handed treatment of businesses has not gone unnoticed by smaller businesses. A higher number of micro businesses (8%) answered that they were ‘very likely’ to look for another bank in the next year, compared to 6% of larger SMEs. This lack of attention has also had a clear impact on the relationship between bank and customer: only 11% of micro businesses state that they have a good relationship with their bank, as opposed to over double that of larger SMEs (but still only a figure of 23%). This has led to only 10% of micro businesses viewing their bank as a ‘trusted adviser’, in comparison to double that (but again this figure is only very small at 20%) of larger SMEs who feel the same.

Being denied a loan has more serious implications for the growth of smaller businesses than larger, as 82% of micro businesses said being denied the loan meant that the growth of their business will be restricted or stunted, as opposed to only 17% of larger SMEs.

Mark Price, MD of Business and Commercial Banking, Metro Bank comments: “Clearly, smaller businesses are being let down by their existing banks. Whatever the size of your business, however many employees you have and irrespective of your turnover, all businesses are welcome at Metro Bank. Our stores are open when it’s convenient for your business, rather than for us.

“Whether your goal is business advice, working capital, commercial mortgages or expansion funding, Metro Bank can help you. What’s more, our focus on local community based banking means that local managers are able to make lending decisions based on the relationship between Metro Bank and your business.”

Metro Bank is growing, with an eighth store launch in Croydon on Friday 17th June. The Croydon store opening forms part of Metro Bank’s accelerated expansion plans to open over 200+ stores over the next 10 years in Greater London, providing a better banking experience to UK consumers. Metro Bank is planning to open a further five stores across London and the Home Counties this year and is still the only high street bank to be granted a full service banking licence by the FSA in the last 15 months.

Notes to Editors All statistics taken from 507 online interviews with SME banking decision makers carried out online in May 2011 by Opinium research for Metro Bank