One of the established ‘alternative’ lenders to SMEs, iwoca, has published a survey. This claims that the main high street banks are expected to further reduce funding for Small businesses. They claim that 77% of SME finance brokers believe high street banks will decrease their appetite to fund small businesses. It also claims that 86% of brokers expect to see increased demand for SME finance in the next six months. However, 68%, believe that the high street banks will further reduce access to working capital for SMEs.

Analysis of Bank of England data shows that 77% of gross lending went to larger firms last year. In contrast the total value of lending by the big banks to SMEs in the first quarter of 2023 has fallen. This is by more than £1bn over the same period i.e. from £15.5bn in Q1 2023 to £14.2bn in Q1 2024.

BFS Comment:

The decline in lending to SMEs by high street banks has led to a rise in the popularity of specialist lenders. Some 59% of SME lending is now coming from outside the big banks. These specialist lenders have proliferated, particularly since covid, with iwoca being just one of them. Indeed this has raised a new problem. That is to determine which of the ‘alternative’ lenders offers the best option for a particular business. This is where BFS, with our experience going back over 20 years, can be essential in ensuring that the best funding option(s) is chosen. For a free consultation fill in our enquiry form or e-mail enquiries@bufinserv.co.uk and we will get back to you.