81pc of brokers predict boom in SME finance demand
81 per cent of brokers expect to see a boom in demand for small business financing over the next six months, according to a new survey from Iwoca.
Small- and medium-sized enterprises (SMEs) have been embroiled in a funding crisis this year, as rising interest rates and high inflation have seen high street banks reduce their lending to small businesses.
The latest quarterly SME Expert Index from Iwoca found that the broker community expects more pain ahead. Three in four brokers (75 per cent) expect the government to miss its target of halving inflation by the end of the year, with the majority predicting that inflation will remain above 5.4 per cent by December 2023.
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Four in five (81 per cent) of the experts surveyed said that they believe continued high costs over the next year will significantly reduce SMEs’ ability to grow their business.
Meanwhile, 84 per cent of brokers said that high street banks have been reducing their appetite for funding SMEs.
However, despite the expected increase in applications, brokers do not anticipate that the SME lending market will recover to pre-pandemic levels. Over a quarter (27 per cent) of brokers believe that the demand for SME loans will not catch up to pre-pandemic levels for another 12 months.
Read more: Iwoca: SME finance gap is growing
“Although the recent drop is welcome, the continued high rate of inflation is reducing small businesses’ ability to grow and invest, and brokers don’t have confidence that progress will be made by the end of the year,” said Colin Goldstein, commercial growth director of Iwoca.
“With high street banks continuing to pull back from SME lending, small businesses need attractive options for financing, or the significant growth potential that they offer the economy will be lost.”
Read more: SME funding crisis: 40pc of SMEs report cashflow problems