HSBC has announced the launch of a £10bn fund to provide loans to small and medium-sized businesses across the UK.

This is the largest support package announced by HSBC for Small and Medium sized Enterprises (SMEs) in the UK with the aim of securing funds needed to grow businesses for companies in England, Scotland, Northern Ireland and Wales. The launch of the £10 billion fund shows intent from the bank to lend more to UK SMEs of all sizes, to help them trade both on the domestic market and internationally. Small businesses are being encouraged to capitalise on the services being offered by HSBC, in order to support their growth.

There are currently a record number of small businesses driving the economy in the UK, but many struggle with access to finances.

According to research, over one million sole traders have have had finance applications turned down and a third have been rejected for bank loans. A survey of 500 business owners conducted by Amigo Loans found that 40 per cent said they resorted to asking family for financial support and 30 per cent reached out to friends. In addition, despite sky high fees, 42 per cent eat into their overdraft in order to fund their start-up.

Former Small Business Minister, Anna Soubry commented:

It’s absolutely right that banks such as HSBC continue to develop their support for smaller businesses. I also want to see more of these businesses taking advantage of what’s on offer, both from banks and alternative lenders, to help them grow, invest and create jobs for people.

The money, which has been pledged by HSBC to help SMEs get access to cheaper finance, forms part of a package of support for smaller firms.

HSBC has not witnessed a decline in loan applications so far this year, and the bank approves 89 per cent of applications from SMEs.

HSBC’s head of UK commercial banking, Ian Stuart, said:

SMEs are the lifeblood of the UK economy and we are committed to providing the finance and support they need to realise their business goals.

Key features

  • 18 months free banking
  • After 18 months of FOC banking, a fixed account rate of £5.50 charged per month for a year.
  • Reduced personal guarantee fee from £80 to £10 on loans of £10,000 and more
  • Online credit eligibility checker for small businesses that want to apply for up to £30,000, which provides a decision in less than 3 minutes.

The bank hopes that the reduced fees will help to attract new commercial customers and retain existing ones.

In her publication of a government-commissioned independent review of self-employment, author Julie Deane, calls for flexible finance to be made more accessible for self-employed people.

According to research, Over 1 in 20 that were refused a bank loan gave up and did not go elsewhere for funding. As a consequence, a potential 73,000 start-ups did not get off the ground, as they were unable to access funding.

Watch out for our content series on funding later this month for more information about alternative sources of financing for UK businesses.