SMEs underestimate loan approvals20/02/2018
The latest British Business Bank research published today (20 February) shows that while there is a growing appetite among SMEs for alternative finance, demand for finance overall remains weak.
The report finds a decline in smaller business confidence and low demand for external finance is becoming entrenched as their cash balances rise. Bank analysis finds that, over the last ten quarters, only 1.7pct of smaller businesses sought new loans, which is a record low since the SME Finance Monitor began in 2011. Less than half (43pct) were confident they would get a loan if they applied, even though most new loan applications (72pct) are approved.
Perhaps most alarmingly, 70pct of SMEs are willing to forgo growth rather than borrow, continuing a trend identified in last year’s Small Business Finance Markets report.
The value of SME asset finance deals (up 12pct) and peer-to-peer business lending (up 51pct) in 2017 both showed strong growth. Although net bank lending volumes remained positive (£0.7 billion) in 2017, they were weaker than in both 2016 (£3 billion) and 2015 (£2 billion). Significant increases were seen in 2017 in both the value and number of SME equity deals (up 79% and 12% respectively).