Improvements Seen In SME Access to Finance Report

Adam Tyler, FIBA’s Executive Chairman, has recently pointed out that one third of SME’s are still unable to secure essential funding.

As chairman and director of The Genesis Initiative, an SME lobbying group’s Access To Finance committee, Tyler put forward a survey and report last week in the House of Commons looking into how access can be improved to financing options for SMEs in the UK to an invited audience which included SME group heads, business lenders, the British Business Bank, UK Finance, peers and MPs.

The largest survey of specialist lenders and SMEs to ever have been undertaken underpinned this report, which outlined their views about how changes could be made in respect of building confidence and awareness and improving access.

The findings of the survey showed:

  • Over half (52.5%) of owners of small businesses go first to their own high-street bank even when taking into account the growing number of alternative sources.
  • 46% of those owners had their application denied when approaching their own bank.
  • Half of business owners whose applications were declined went on to end their search for funding in the belief they had no further avenues which could be explored.
  • When SME owners were asked their reasons for giving up on searching for funding, the reasons given included a lack of confidence in and understanding of lenders which they had never heard of together with a lack of accessibility.
  • 31% of SME owners believed interest rates and/or fees which would be charged by alternative lenders would probably be prohibitively high. Meanwhile, 26% lacked confidence in non-mainstream lenders and 11% had concerns that new lenders would lack longevity.
  • When looking at the lenders’ point of view, it was revealed that 29% were in agreement with the opinion that a lack of familiarity with their brand and the service they offered were major reasons for SME owners failing to contact them. 22% thought the problem was that SME owners were unaware of how they could be contacted.

When referring to the survey, Tyler commented that, while it was clear that some progress had been made, evidence showed that considerably more changes need to take place if access and visibility of alternative lenders are to be improved. Increasing business owners’ confidence in these lenders is of the highest importance, however this is only possible by increasing awareness and educating SME owners, both about the lenders themselves and about the various ways in which they are able to deliver appropriate finance packages. In this respect, the broking sector will be instrumental in continuing to play a key role.

A comprehensive solution is required, and this survey and report has delivered a unique and relevant insight into lending to small businesses at this critical time while we pursue a conclusion to the nation’s debate about how our future trade relationship with other countries worldwide will pan out.

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