Business loan applications rose during the first quarter of the year while traditional lenders reduced their appetite to lend, new data has found.
According to the latest quarterly SME Expert Index from Iwoca, almost half (45 per cent) of brokers said that they saw an increase in the number of loan applications from their clients during the first three months of 2023.
By contrast, just over one in ten (14 per cent) brokers reported a reduction in loan applications.
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However, Iwoca noted that a tough lending environment persists for small- and medium-sized enterprises (SMEs).
77 per cent of brokers said that high street banks are reducing their appetite to fund small business loans, while 39 per cent said that they have seen an increase in loan rejections over the last quarter.
This could lead to an increase in new opportunities for alternative lenders such as peer-to-peer lending platforms.
Iwoca’s research also found that SMEs are regaining confidence in the economy, with fears of a looming recession at their lowest level for a year. 63 per cent of brokers said that their SME clients were concerned about a future recession during the first quarter of 2023, down from 77 per cent this time last year.
Read more: Iwoca: SME finance gap is growing
“The lending market for the UK’s 5.5m small and medium-sized businesses is gradually gaining momentum,” said Colin Goldstein, commercial growth director of Iwoca.
“With more applications for loans, more businesses requesting finance to grow their business, and recession fears continuing to recede, there are positive signs that the market and health of our economy will improve.
“But while I’m cautiously optimistic, I know the very real challenges SMEs face. I speak to brokers day in, day out; they’re seeing high street banks retrenching, huge pressures coming from the energy market, and concerns about the lack of support from central government.”
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