UK bank lending to small and medium sized retail businesses has fallen by 4% in the last year. ?14.9 billion was lent this year, down from ?15.6bn the year before.
This is according to new research from Funding Options, an online business finance supermarket.
The funding has reduced as banks concerned over abilities to deal with retail challenges.
High streets are becoming hollowed out as more big retailers shift their focus to online.
Smaller retailers need more funding to enhance their websites and improve their high street offering to compete.
Smaller retailers risk going out of businesses as traditional forms of lending become harder to access.
Retailers are finding it tougher to get credit from their own suppliers. This also creates extra pressure on cashflow.
Insolvency Service data shows that insolvencies in the sector jumped by 13% in the year to September 2018.
More small businesses are turning to alternative finance providers to combat the funding gap.
A recent report showed that the use of alternative finance options by businesses have increased in the last year.
Bank lending seems to be shifting away from smaller to larger retailers. Lending to large retailers has risen by 5% over the last year, to ?37.7bn in November 2018 from ?36bn the year before.
Conrad Ford, CEO of Funding Options?comments: ?Retailers struggling to get lending must not give up the ghost. There are other forms of finance other than bank loans.?
?Many small businesses have characteristics, such as seasonality. That can mean they have different risk profiles. Being a seasonal business can mean inconsistent income, and cashflow. This can make it hard to maintain the regular loan repayments.
?There are alternative financing options available that can support growth and investment. These options are often flexible and accommodating.?
?The more retailers are aware of these options, the better.?