Two-thirds extra SMEs experiencing problem in accessing finance from mainstream lenders

Two-thirds extra companies are experiencing problem in accessing finance from high-street banks than they have been in 2022 as mainstream lenders draw back from the SME market.

That’s based on new information from Sonovate, the main supplier of embedded finance and cost options for the contingent workforce.

These challenges at the moment are so acute that two in 5 UK companies say that, as a result of funding being so exhausting to entry, they’re fearful about the way forward for their organisation. This can be a bleak image, notably when thought of inside the wider financial context of rocketing rates of interest that are having a devastating influence on British companies.

The findings come as a current report from British Enterprise Financial institution reveals that fairness finance for UK small and medium-sized corporations declined by 11% in 2022 to £16.7 billion. This was pushed by a downturn in market situations within the second half of the yr which has continued into 2023.

It’s a pattern that appears set to proceed, with half of companies surveyed by Sonovate saying it has been tougher to get the finance they want compared to the interval earlier than the price of residing disaster.

Moreover, half of organisations say banks don’t perceive their enterprise wants, in comparison with 38% in 2022, and greater than half say banks’ lending insurance policies haven’t saved tempo with fashionable enterprise wants, which compares to 41% in 2022.

This disconnect is, partly, being bridged by fintechs, who’re stepping in to supply different finance choices the place banks are failing. 40% of companies agreed that it’s simpler to entry finance from a fintech lender somewhat than mainstream banks, and 7 in ten say their enterprise wouldn’t have survived the present disaster if it weren’t for different finance choices.

However, with a big proportion expressing uncertainty in realizing the place to seek out different funding suppliers, it’s clear that extra assist is required to signpost the choices obtainable to companies. Certainly, round two-thirds of companies agree that there must be extra steerage from the federal government in regards to the funding choices for small companies.

Richard Prime, Co-Founder & Co-CEO of Sonovate feedback: “The broader financial state of affairs throughout the UK is placing companies of all sizes below immense monetary strain, and the lack to entry the money movement they want is exacerbating the difficulty tenfold.

“With banks more and more unable to supply the extent of assist that companies want, there’s a important alternative for fintechs to step up and supply different finance choices that can show crucial to conserving many organisations afloat. We’ve seen this demand first hand – to this point, we have now already offered over £4 billion in funding, and count on the necessity for on-demand funding to proceed to soar with lowered urge for food from banks to supply finance to the UK’s revolutionary SMEs.”

Sonovate was arrange as a challenger to conventional funders, and gives companies – from start-up to enterprise – with on-demand bill financing. The tech platform delivers swift credit score selections, same-day funding, credit score insurance coverage and assortment providers in addition to timesheet and workflow automation, empowering corporations to focus on increasing their enterprise, assured that processes and funds are in place to assist meet cost deadlines. Because it began funding in 2014, Sonovate has lent over £4 billion to three,300 companies and 40,000 employees in 44 nations.