North West businesses suffer £6.3bn lending shortfall from UK's 'Big Six' banks

New research from Allica Bank shows that small and medium-sized businesses (SMEs) in the North West have experienced a £6.33 billion shortfall in lending over the past 30 years.

The report attributes this funding gap to a long-term decline in SME lending by the UK’s six largest high-street banks. Nationally, this has contributed to a £65 billion shortfall in SME credit, which the report links to the UK’s position as having the lowest business investment rate among G7 countries.

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For the North West’s 265,000 SMEs, the missing £6.33 billion represents funds that could have supported investment, business development, and productivity gains.

The £65 billion figure was calculated by comparing current SME lending levels to historic trends and international benchmarks. The data suggests that lending has not kept pace with what might have been expected based on past patterns and the experience of similar economies.

The research also notes a decline in the number of SMEs seeking external finance, falling from 65% in the late 1980s to 25% between 2022 and 2024. Meanwhile, loan rejection rates have increased significantly—from between 5% and 10% thirty years ago to around 40% today. In the North West, the lending gap is equivalent to roughly 2.3% of the region’s GDP.

Allica Bank states that it plans to address some of this shortfall by lending £1 billion to established SMEs during 2025. It is also increasing the number of relationship managers it employs, including in the North West, where Pete Norris, Amanda Meyerhoff, and Asif Dogar are among those working directly with businesses.

The bank says it is aiming to process loan applications within five days, citing the importance of quick decisions for businesses making future plans. It has invested in technology to help meet this goal.

“The North West is home to some fantastic businesses and a business community that wants to invest, grow and innovate,” said Pete Norris, Allica Bank’s Relationship Manager for the North West. “All too often, however, business owners struggle to find the finance they need to do so.

“Recent decades have seen many banks focus lending only on businesses with significant assets and property, or shy away from supporting some sectors altogether. Our data reveals that three decades ago only 5-10% of SME loans were rejected – a figure that stands at 40% today.

“This shows a banking sector failing to keep pace with a changing economy and this is having real knock-on effects for the North West economy, and the country as a whole. A big contributor to this is the antiquated technology many big banks have, and the lack of real human support they offer established SME businesses in the North West.

“Relationship managers like myself can help business owners identify opportunities to borrow, can help them make a strong application and can champion that business within the bank. At Allica, we combine that relationship-based approach with smart technology that keeps things moving fast.

“As somebody who works with businesses across the North West every day and sees the creativity and dynamism waiting to be unleashed, I’m excited to be part of the team aiming to close that SME lending gap. The Big Six banks have undervalued, underfunded and levelled-down the regional economy for too long, we’re aiming to remedy that.”