More businesses struggling to access finance from banks
Two thirds more businesses are experiencing difficulty in accessing finance from mainstream lenders than they were in 2022, as banks retrench from small- and medium-sized enterprise (SME) lending.
Research from embedded finance solutions provider Sonovate also revealed that two in five (39 per cent) UK businesses say that they are worried about the future of their organisation.
Half of businesses surveyed by Sonovate said it has been harder to get the finance they need in comparison to the period before the cost-of-living crisis and 48 per cent of organisations say banks do not understand their business needs.
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However, fintechs are stepping in to offer alternative finance options and 40 per cent of businesses said that it is easier to access finance from a fintech lender rather than mainstream banks.
Seven in 10 businesses said their company wouldn’t have survived the current crisis if it weren’t for alternative finance options.
The findings come as a recent report from British Business Bank shows that equity finance for UK SMEs declined by 11 per cent in 2022 to £16.7bn.
“The wider economic situation across the UK is putting businesses of all sizes under immense financial pressure, and the inability to access the cash flow they need is exacerbating the issue tenfold,” said Richard Prime, co-founder and co-chief executive of Sonovate.
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“With banks increasingly unable to offer the level of support that businesses need, there is a significant opportunity for fintechs to step up and provide alternative finance options that will prove critical to keeping many organisations afloat. We’ve seen this demand first hand – to date, we have already provided over £4bn in funding, and expect the need for on-demand funding to continue to soar with reduced appetite from banks to provide finance to the UK’s innovative SMEs.”
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