Gloomy credit conditions fail to dampen SME confidence


A recent report has found that despite increased business confidence, many SMEs are struggling to access and afford bank finance as loan acceptance rates show a decrease at the end of 2016.

The FSB Voice of Small Business Index revealed the share of small businesses successful in their credit applications fell from 70% to 62% in Q4 2016, leading many small businesses to search for alternative methods of finance .

The lending landscape continues to evolve and, with solutions such as asset based finance available and growing, whereby funding is released against the value of a range of business assets in order to satisfy the demand for growth, often small businesses are being attracted towards the diverse benefits this brings.

According to the Asset Based Finance Association’s quarterly statistics, advances made to asset based finance clients increased year-on-year in Q3 2016 by 4% to £20.7bn .

With asset based finance, the umbrella term for invoice finance, factoring and asset based lending (ABL), now a popular option, this industry looks set to play a big part in the future of UK SMEs.

Rising confidence

The nationwide research showed confidence in the last quarter bounced back to the level reported before the EU referendum campaign at +8.5, up from -2.9 in the third quarter.

Despite this, a further probing of the market revealed that, although confidence levels were high, SMEs reported little financial gain in terms of profit – which saw the second quarter in a row decline.

The cause was said to be rising costs, with 28% of respondents citing the exchange rate as the main cause of cost inflation. This compares to the mere 5.4% at the same time last year. The post-Brexit shock, having lowered the rate of the sterling, has again had a major impact on this.

Over the coming year, projected growth has also been rain-checked, with 37.5% expecting to remain the same size, up from 27.4% in the previous quarter.

Mike Cherry, national chairman of the FSB, said: “The current economic outlook seems brighter, and UK small businesses are ambitious and want to make the most of it. Small exporters continue their strong rise, as UK goods and services become more competitive overseas and small businesses go out to find new markets and new customers.

“Despite the overall positive picture, our members still face many challenges as rising costs squeeze margins even further. The falling pound is driving up the price of imports and rising oil prices are being reflected in higher fuel costs. These inflationary pressures and price competition are hitting the bottom line hard with the majority of small firms seeing their profits continue to fall.”

If you would like to find out about how asset based finance can benefit your business growth and development, as a trusted and experienced finance broker, we can help. Our team can be reached on 0800 9774833 or emailed at


Some of the funders we work with

  • Castlebridge
  • eCapital Commercial Finance
  • IGF Invoice Finance
  • Optimum Finance
  • Santander Corporate & Commercial
  • Kriya
  • Davenham Asset Finance
  • Clear Factor
  • Woodsford Tradebridge
  • Tradeplus24
  • Davenham Trade Finance
  • Sonovate
  • Partnership Invoice Finance
  • Roma Finance
  • 4Syte
  • Lloyds Bank Commercial Finance
  • Merchant Money
  • Praetura Invoice Finance
  • Royal Bank of Scotland
  • Leumi ABL
  • Peak Cashflow
  • Metro Bank SME Finance
  • Investec
  • Pulse Cashflow Finance
  • Berkeley Trade Finance Ltd
  • Aldermore Invoice Finance
  • Nationwide Finance
  • Team Factors
  • Cynergy Business Finance
  • Skipton Business Finance
  • PNC Business Credit
  • InvoCap
  • Accelerated Payments
  • Regency Factors
  • Giant
  • Barclays
  • Close Brothers Invoice Finance
  • ABN AMRO Commercial Finance
  • Ultimate Finance Group
  • MaxCap
  • Haydock Finance Ltd
  • Blazehill Capital
  • Time Finance

Authorised and regulated by the Financial Conduct Authority (FCA number 730445)
We are a credit broker and not a lender and offer credit facilities from a panel of lenders