Iwoca: SME finance gap is growing
The finance gap for small- and medium-sized enterprises (SMEs) is growing, new research from Iwoca has found.
Iwoca’s SME Expert Index for the fourth quarter of 2022 found that 82 per cent of brokers have seen a lower appetite from banks to fund SMEs. However, 79 per cent believe that demand for SME finance will rise in the coming year.
More than eight in 10 brokers (84 per cent) said that their SME clients are worried about the survival of their businesses, with 50 per cent predicting that an economic recession will be worse for small businesses than the pandemic was.
Read more: How easy is it to access platform data?
Colin Goldstein, commercial growth director at Iwoca, said that the broker survey demonstrates the need for alternative SME financing solutions.
“With brokers predicting that the impact of current macroeconomic pressures this year will be worse than the pandemic for small businesses, it’s clear that SMEs across the UK are in need of financial support,” Goldstein said.
“And – as our data shows – traditional banks just aren’t offering this.
Read more: Iwoca: Almost half of SMEs fail to meet start-up objectives on time
“Alternative lenders are once again proving just how crucial they are to protecting small businesses from this financial shock.”
Almost half (49 per cent) of brokers reported that more of their clients’ applications for finance were rejected in the fourth quarter of 2022, compared to previous quarters.
However, demand for SME finance is already starting to rise. 39 per cent of brokers told Iwoca that they had already seen a rise in applications for finance over the last month, with just one in seven brokers (14 per cent) seeing applications fall.
Read more: Iwoca reaches profitability and expands Pollen Street funding line