Big banks lent £41bn more to the richest parts of the country compared with the poorest regions.
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Big banks are pulling funding for small businesses in some of the poorest regions of England, according to new analysis.
Lending to small and medium enterprises (SMEs) in Great Britain fell by 8% between 2014 and 2018, with the most deprived areas worst-hit, according to business lender iwoca.
It found that lending to small businesses in Blackpool – the most deprived area in England, according to government statistics – fell by 27.6%, but Wokingham in Berkshire, the least deprived area, increased by 18.2%.
Small businesses in the wealthiest areas of England were able to borrow £2 billion more than those in the poorest parts of the country, despite having similar populations.
The North West was hardest hit, with lending from big banks falling by 16%, or £1.6 billion. The North East and Yorkshire also experienced a squeeze.
London got off lighter than any other region, with a 3% drop in funding. Westminster saw the sharpest rise in the capital with a 41.3% boost in lending.
Iwoca chief executive Christoph Rieche said: “It’s … concerning that, in many parts of the country, major banks aren’t serving small and microbusinesses with the funding required to help them thrive.
“SMEs are vital for the health of the economy.”
The company looked at ONS wage data which showed that the average weekly salary in the 20 local authorities worst hit by the drop in lending was £488. In these areas SME financing fell by an average of nearly 35% over five years.
At the opposite side of the spectrum, people earned £529 a week in areas where lending increased at the fastest rate – a difference of more than £2,100 a year.
However, despite a drop in small business loans, the data showed that lending to individuals has increased across England.
In the most deprived areas, personal lending has risen by 15%, and in the wealthiest it has increased by 22%.
Small Business Minister Kelly Tolhurst said: “We’re backing businesses right across the country. £7 billion from the government-owned British Business Bank is supporting over 91,000 SMEs, the majority outside London and the South East and our Northern Powerhouse Investment Fund has invested over £135 million in smaller businesses across the North of England. But we are determined to do more to level up across the country.”