Banks wrote £423m in
new loans to construction SMEs in April, a drop of 16% on the figure for March
2020 and 26% on the £573m lent in April 2019.
Hacker Young said that banks have been traditionally reluctant to lend to
construction companies when there is uncertainty in the economy and relatively
high levels of insolvency in the sector. Additional concerns currently include
the slowing of construction activity in the run up to Brexit, and the recent
high-profile collapses of construction companies such as Carillion.
Fitch, partner at UHY Hacker Young said: “Banks have always been wary about
lending to smaller construction businesses when the economy is looking shaky.
The coronavirus crisis could push more construction businesses over the edge.”
companies have had some support with the job retention scheme and bounce back
loan scheme but the financial benefit of these will have only gone a short way
to mitigate the impact that lockdown has had on their bottom line.”