ThinCats blames macro issues for business funding crisis

Macro issues are to blame for lower levels of business funding activity, according to a new survey by alternative finance provider ThinCats.

The former peer-to-peer lending platform surveyed 50 leading UK corporate finance, debt advisory, accountancy and private equity firms, and found that advisers are seeing lower levels of activity and reduced business pipelines compared to six months ago.

52 per cent of the advisers surveyed said that macro issues were the main cause of the lack of funding, while 36 per cent blamed interest rate hikes and 32 per cent cited valuation expectations as the most significant issues.

Meanwhile, more than half (56 per cent) of advisers reported lower levels than six months ago.

While only 12 per cent of advisers felt that availability of funding was a constraint to businesses seeking finance, almost two thirds (64 per cent) said that less funding was available from banks compared to six months ago.

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However, just 28 per cent said they felt there was less funding available from non-bank lenders.

“It’s no real surprise that corporate finance advisers are reporting reduced demand for debt funding given the continuing macro challenges and hikes in interest rates as the Bank of England grapples with lingering high levels of inflation,” said Ravi Anand, managing director of ThinCats.

“What’s encouraging from the survey is that availability of debt is not seen as a major barrier to securing funding. Whilst the perception is that there is less funding available, particularly from the banks, there seems to be sufficient to meet current demand.

“The trend for non-bank lenders, to be the primary source of SME funding, rather than high street banks, continues.”

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Anand added that ThinCats provided a record amount of funding to mid-sized businesses during the first six months of the year.

“Despite high interest rates, many businesses continue to see opportunities to deliver new income streams which more than cover the higher costs of borrowing,” he added.

“Further encouragement can be drawn from recent data indicating inflation rates are now falling, which could mean we are approaching the peak of the current interest rate hike cycle.”

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