August 24, 2022
According to the most recent quarterly SME Expert Index from iwoca, small business owners are worried about the possibility of a recession.
More than 7 in 10 brokers surveyed (77%) said their small business clients are concerned about the prospect of a recession as a result of rising living and operating costs. Less than 7% of brokers, in contrast, claimed that their SME clients were “unconcerned.”
Based on analysis from UK brokers who jointly filed over 1350 applications for unsecured loan on behalf of their SME clients in June, iwoca’s Q2 2022 SME Expert Index was created.
Small enterprises’ need for financing has increased significantly as a result of the growing economic unpredictability. Nearly half of brokers (46%) submitted more loan applications for small business financing in the most recent month compared to the previous one, continuing a trend upward since the end of last year. In Q4 2021 and Q1 2022, 34% and 28%, respectively, reported similar trends in terms of increased loan demand.
In addition, 0% of brokers reported noticeably fewer applications in the most recent SME Expert Index.
In light of the uncertain economic outlook, the study also finds that small enterprises are searching for greater loans. The largest proportion since the Index’s debut, 13% of brokers said loans of £200,000 or more were the most popular type for small firms. Looking back on this pattern, we can see that demand for loans over £200,000 has been slowly rising ever since the first iwoca Index was published in Q1 2021, when only 4% of brokers stated that these larger loans were the most frequently sought.
Iwoca recently announced that it is more than doubling the maximum size of its core lending product, Flexi-Loan, allowing small business owners to access business loans up to £500,000, up from a previous lending cap of £200,000, in order to meet this growing appetite for high value loans in the small business sector.
Small firms may be preparing for financial strain, particularly cash flow concerns, as evidenced by the increased demand for funding in higher sums. The majority of brokers (37%) identified the most typical loan objective for small firms as managing ongoing cash flow. Since the previous quarter, this reflects a rise of 6 percentage points.
Source: iwoca
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