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.
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This is according to new research from Funding Options, an online business finance supermarket.
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The funding has reduced as banks concerned over abilities to deal with retail challenges.
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High streets are becoming hollowed out as more big retailers shift their focus to online.
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Smaller retailers need more funding to enhance their websites and improve their high street offering to compete.
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Smaller retailers risk going out of businesses as traditional forms of lending become harder to access.
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Retailers are finding it tougher to get credit from their own suppliers. This also creates extra pressure on cashflow.
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Insolvency Service data shows that insolvencies in the sector jumped by 13% in the year to September 2018.
Alternative lending
More small businesses are turning to alternative finance providers to combat the funding gap.
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A recent report showed that the use of alternative finance options by businesses have increased in the last year.
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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.
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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.?
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?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.
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?There are alternative financing options available that can support growth and investment. These options are often flexible and accommodating.?
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?The more retailers are aware of these options, the better.?
