Loan approvals rise, but businesses are failing to take advantage


The approval rate for funding applications might be on the rise, but many small and medium-sized businesses are failing to take advantage, new research suggests.

According to the latest BDRC SME Finance Monitor, 85% of SME applications for a loan or overdraft resulted in a facility during the first six months of 2018.

This is an improvement on the 80% success rate reported in 2017.

The independent report is based on the findings of more than 4,500 interviews every quarter. It is used by banks, the government, Bank of England and industry bodies to assess trends with regards to SME access to finance.

However, despite this evidence of an improved access to finance, almost two-thirds of SMEs are not using external funding to support their business.

Just 34% of SMEs were using external finance in H1 2018, down from the 38% reported in 2017.

This is despite the inclusion of a range of new forms of funding in the data, including crowdfunding, asset based lending and single invoice finance.

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So, what’s behind the decline?

According to the report, SMEs remain self-reliant when it comes to financing their activity, with many harbouring concerns about the future.

While access to finance was the least mentioned factor when firms were asked about the major barriers they faced going forward (5%), almost one in three (31%) viewed legislation and red tape, political uncertainty, and the current economic climate as their primary obstacle.

The doubt that exists regarding the shape of post-Brexit Britain is clearly having an impact, with 51% of respondents saying they were being more cautious because the future felt uncertain.

Interestingly, almost three-quarters of SMEs (73%) said that they were willing to grow more slowly rather than borrow to grow faster.

And although a third of SMEs were happy to borrow to grow, this has fallen from 45% in 2015.

There can be little doubt that the ongoing economic uncertainty is having an impact on the mindsets of business owners, with many adopting a ‘wait and see’ approach as the UK government continues to negotiate the terms of the deal to leave the European Union.

However, recent research from Hitachi Capital suggests this could be a risky approach. Their findings indicate that, without adequate access to finance, many small businesses can be negatively impacted.

The good news is that businesses which are looking for traditional forms of finance appear to be finding it easier to obtain than before. And, with the government still searching for ways and introducing measures to make other forms of finance accessible to all, help is at hand to help businesses to overcome their challenges and meet their objectives.

To see if your business could secure a loan contact us on 0800 9774833. Or request a call back to discuss your requirements with a member of our team.
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Some of the funders we work with

  • Creative Capital
  • Sonovate
  • Aldermore Invoice Finance
  • Clear Factor
  • Barclays
  • Trade Finance Partners
  • Metro Bank SME Finance
  • Royal Bank of Scotland
  • Giant
  • ABN AMRO Commercial Finance
  • Investec
  • Time Finance
  • InvoCap
  • 4Syte
  • MaxCap
  • Secure Trust Bank
  • IGF Invoice Finance
  • Pulse Cashflow Finance
  • PNC Business Credit
  • Davenham Asset Finance
  • Nucleus Commercial Finance
  • Lloyds Bank Commercial Finance
  • Santander Corporate & Commercial
  • Roma Finance
  • Shawbrook Business Credit
  • Boost Capital
  • Ultimate Finance Group
  • iwoca
  • MarketFinance
  • Merchant Money
  • Woodsford Tradebridge
  • Bibby Financial Services
  • Davenham Trade Finance
  • Team Factors
  • Partnership Invoice Finance
  • Blazehill Capital
  • Optimum Finance
  • Accelerated Payments
  • inFund
  • Leumi ABL
  • Skipton Business Finance
  • Berkeley Trade Finance Ltd
  • Close Brothers Invoice Finance
  • Haydock Finance Ltd
  • Peak Cashflow
  • Regency Factors
  • FIBR Tech Limited
  • Asset Advantage

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