Cashflow finance tops SME borrower concerns
Small- and medium-sized enterprises (SMEs) are primarily concerned about seeking financing for cashflow, according to the latest quarterly poll by Iwoca.
The Iwoca SME Expert Index for the third quarter found that 42 per cent of SMEs are applying for funding in order to manage their day-to-day cashflow, up from 26 per cent during the same quarter last year.
Additionally, 41 per cent of SMEs said that they were seeking funding to grow their business.
Read more: SME owners turn to personal loans amid funding crisis
Meanwhile, the cost of borrowing has become more important to business owners. 17 per cent of the SME leaders surveyed by Iwoca said that the total cost of borrowing was the most impactful factor when brokers present competing loan offers to them. This is up from six per cent during the second quarter of the year.
Iwoca also surveyed brokers about what they look for from lenders when sending a borrowing application and found that the speed of receiving a decision was the most important consideration.
Furthermore, 24 per cent said the level of operational support being offered by the lender was a key factor. This is a six per cent rise from the previous quarter.
Read more: Brokers call for more information from alternative lenders to attract SMEs
The Iwoca report also found that the vast majority of SMEs are seeking to borrow less than £100,000. During the third quarter of 2022, 19 per cent applied for loans of £25,000 or less; while 22 per cent sought loans of between £25,001 and £50,000. 28 per cent of SMEs requested loan values of between £50,001 and £100,000.
Ongoing economic turmoil appeared to weigh heavy on brokers, as 19 per cent predicted that the lending market will not return to pre-pandemic levels for at least another year.
Furthermore, 75 per cent said that their small business clients were either “very concerned” or “concerned” about the possibility of a recession.
83 per cent of brokers said their SME clients are concerned about their businesses surviving due to increased energy prices.
Read more: Interest rate rises to cost SMEs £13.6bn
