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Peer2Peer Finance News | July 23, 2019

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Low business confidence does not reflect increased SME lending

Low business confidence does not reflect increased SME lending
  • On September 23, 2016

BUSINESS confidence is low among small- and medium-sized enterprises (SMEs), despite increased lending and expansion plans.

According to a new report from the Federation of Small Businesses (FSB), business confidence levels are at a four-year low. However, this claim was quickly refuted by the National Association of Commercial Finance Brokers (NACFB), which claimed that lending was significantly up.

“This news does not really tally with the feedback we have received from our network of commercial finance brokers, gathered during the period July 2015 to June 2016,” NACFB chief executive Asdam Tyler told Peer-to-Peer Finance News.

Earlier this month, the NACFB published a report claiming that small business lending hit an all-time high over the past 12 months, with lending increasing by 29.8 per cent to £20.7bn. The industry body added that many of its clients will pursue P2P lending directly, rather than going through a broker.

“In our experience, small businesses are often turning directly to P2P funding without feeling they need the services of a broker,” said Tyler. “Of course we would always recommend going via a broker because they will have studied, and have experience of, the many different channels through which a business can find funding in 2016. Sometimes P2P is the right answer and sometimes it’s not.”

However, the FSB’s Q3 Small Business Index (SBI) Survey found that business confidence is at -2.9 per cent, entering negative territory for the first time since 2012. Falling confidence levels were said to be down to political uncertainty and a fragile economic outlook.

“For the first time in four years, confidence is in negative territory,” said FSB National Chairman Mike Cherry. “This persistent downward trend in UK business confidence reflects underlying issues that predate the Brexit decision.

“Small firms are resilient and will survive the current fragile economic outlook, but to avoid an economic slowdown this data should be a wake-call for our elected politicians.  The UK small business community seeks key domestic policy decisions if we are to grow, to invest, to export and to create jobs.”

Despite their gloomy outlook, 55 per cent of businesses said that they planned to grow over the next 12 months, and just 11 per cent of respondents said they expected to scale down or close their business in the next year.