The State of Commercial Finance in the UKDownload the report
In July, Spotcap spoke to over 130 commercial finance intermediaries and collected their views on the current state and future of SME lending. By speaking to those who help UK businesses source funding we wanted to gather more insights into the £28 billion SME finance market. Intermediaries play a crucial role here, yet often go unrecognised.
According to recent statistics from UK Finance, UK lenders approved over 290,000 loans and overdrafts to small and medium-sized businesses (SMEs) in 2018. However, despite the healthy size of the SME loan market in the UK there is still a £22 billion funding gap, with many businesses struggling to get capital for their needs, according to the Bank of England. What’s more, recent stats from the British Business Bank highlight the importance of commercial finance intermediaries stating that businesses receiving external support when looking for funding are 25 percent more likely to become high-growth companies.
Key findings from the survey include:
- Commercial finance intermediaries are divided on Brexit. One out of four respondents consider it a key challenge, while one fifth believe that it will bring new business opportunities.
- Commercial finance intermediaries have a positive future outlook. 77 per cent of respondents believe that the number of loans they broker will increase; more than half of these even go so far to say that they believe it will rise by a lot.
- Property, professional services, construction and manufacturing are perceived as the key industries for business growth.
- The number of documents required to process an application is viewed as a barrier. This is closely followed by generating new business and understanding the offering of different lenders.
Commenting on the findings, Niels Turfboer, managing director at Spotcap, said: “Commercial finance intermediaries are an important part of the SME funding jigsaw. The survey insights show that there is a lot of potential for them to help fill the £22 billion funding gap. The more adaptable and open-minded to change intermediaries – and lenders – are, the better and faster they can compete and grow their business.”
Last but not least, a special thanks to our partners NACFB and FIBA who supported us in collecting the findings presented.
Adam Tyler, the Executive Chairman at FIBA, the Financial Intermediary & Broker Association, adds: “We benefit hugely from such a wide range of lenders and to know that SMEs are still not aware of the choice is very disappointing. My own research has revealed similar shortfalls and the more we can do collectively, the more small businesses can get the funding they require.”
Graham Toy, CEO of the NACFB, the National Association of Commercial Finance Brokers, responded to the findings: “The research chimes with our own view of the commercial finance broker’s role in supporting and advising business borrowers. Brokers have a positive outlook partly because they remain instinctively agile, with many of them having weathered the unpredictability of a post-2008 world.
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Originally published September 6 2019 , updated September 10 2019