Iwoca: SME demand grows for larger loans
The most requested loan amount for small- and medium-sized enterprises at the start of 2024 was more than £100,000, according to three in 10 finance experts.
That is 56 per cent higher than the same period last year, according to Iwoca’s first quarter 2024 SME Expert Index.
The research, conducted with SME finance brokers who submitted more than 2,500 loan applications over a four-week period, showed increasing signs of positivity in the UK lending market for SMEs.
Seven in 10 brokers said they were optimistic about SMEs prospects in 2024, while just one in 12 were pessimistic about their clients’ outlook for the year ahead.
This comes as nearly two in five brokers said the number of applications for finance they submitted for SMEs had increased since the last quarter, while nearly half (49 per cent) said the volume of applications had stayed the same.
Read more: Funding Circle: 77pc of SMEs expect to need additional funding
Meanwhile, more than two-fifths (41 per cent) of brokers reported that the primary purpose of the loans they are applying for was to help SMEs grow their business.
Demand for finance from SMEs was predicted to grow in the next six months by nearly nine in 10 brokers (86 per cent), the highest level seen over the last six quarters.
To meet the increasing demand, Iwoca has secured a £270m package of debt funding, pushing its total investment over £1bn since 2012.
As the UK officially came out of recession, fears of a future recession among the UK’s 5.5 million SMEs have fallen to their lowest level in almost two years.
Two-fifths of brokers reported that the SMEs they act for were still concerned about a recession, down from a peak of 77 per cent in the second quarter of 2022.
Read more: SMEs seek larger loans as banks reduce lending
While recession fears have receded, the data shows that concerns about inflation remain, with four in 10 brokers saying increasing running costs are their main worry for the SMEs they work with.
“The UK’s SME lending market is experiencing a resurgence,” said Iwoca commercial growth director Colin Goldstein (pictured). “We’re seeing a significant rise in loan applications, with many businesses seeking larger sums to invest in growth. This coincides with low recession fears amongst SMEs – a positive sign that could point to a stronger year ahead for our economy and the small businesses underpinning it.”
Connect Mortgages business finance specialist Tehmina Mirza added: “High street lenders have their set criteria and are quite inflexible about them. They are picking and choosing the type of business they want to be in. I’m finding more businesses do not fit or meet these parameters, leading to a shift towards alternative lenders.”
Read more: Iwoca partners with Countingup to offer flexible business loans
