Small- and medium-sized enterprises (SMEs) are increasingly seeking out growth funding, as the post-pandemic recovery continues.
According to Iwoca’s latest SME Expert Index, 43 per cent of small business owners sought financing for growth in the fourth quarter of last year.
This was the second consecutive quarter that SMEs have cited growth as their primary focus.
In the third quarter of 2021, 35 per cent said they were seeking finance for growth, up from 25 per cent in the second quarter.
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The number of brokers who said ‘recovery from lockdown or closure’ is the most common loan purpose for SMEs dropped to nine per cent in the last three months of 2021 as fears around the spread of the Omicron variant started to fall.
As Covid restrictions eased and businesses looked to post-pandemic growth, the number of brokers who sought finance for businesses’ cashflow as a primary reason fell from 41 per cent in the first quarter last year to 24 per cent in the fourth quarter.
Iwoca found that in the fourth quarter of last year demand for larger loans – those between £100,001 and £200,000 – rose while fewer SMEs were after smaller loans, of less than £25,000.
Iwoca’s research also revealed that brokers have not seen a significant rise in take-up of the recovery loan scheme since the Chancellor extended it in November.
With the scheme set to wind down in June 2022, a quarter of brokers (25 per cent) reported that they saw demand drop over the last three months, while 32 per cent reported a rise.
“This quarter’s SME Expert Index indicates growing confidence among small businesses, who have endured the blow of the Omicron shock,” said Colin Goldstein, commercial growth director of Iwoca.
“After two years of uncertainty, SMEs are now able to set their sights on growth – an encouraging sign that the mainstay of the UK economy is on its feet once again.
“We need to continue to support small businesses in accessing finance, to power this growth and contribute to a meaningful economic recovery.”