More than a third (38 per cent) of brokers have seen a rise in the number of lending applications for unsecured business funding in May, as the government’s Covid support packages began to wind down.
According to business lender Iwoca, cash flow was the main reason behind the funding requests.
Other small- and medium-sized enterprises (SMEs) said that they required funding to grow their business, while 21 per cent of businesses told brokers that they needed finance to recover from lockdown or closure.
Iwoca’s SME Expert Index found that almost one in five (19 per cent) brokers said that they had seen demand from SMEs increase significantly in May – with 50 per cent or more applications compared to the previous four weeks.
”The SME Expert Index provides vital insights from the broker community into what SMEs need, and how lenders can best support them as they look beyond the Covid-19 crisis.
“Access to finance is crucial for small businesses who are looking to grow and recover from the pandemic. As social distancing restrictions ease and the economy opens up, it’s encouraging that SMEs are feeling increasingly confident to use credit as an important tool to help them get back on track.”
More then half (55 per cent) of the brokers quizzed by Iwoca reported that the most commonly requested unsecured loan amount they’d applied for on behalf of their clients was under £50,000. 17 per cent were most likely to request loans under £25,000 – below the threshold of the government-backed Recovery Loan Scheme (RLS).
A third of brokers said that have either been waiting or are still waiting for non-bank lenders to be accredited to the RLS.
Just over two-thirds (68 per cent) of brokers said that the “speed of receiving a decision” and that the “amount requested meets lender’s offering” were the most significant factors to consider when deciding which lender to send a submission to.