Purchasing a property is a main driver for borrowing
Some 62% of brokers with clients in the small to medium-sized enterprises market have seen appetite for external financing grow, according to a survey by digital lender Atom bank for the first quarter of 2024.
Commercial brokers say that SMEs are pursuing opportunities presented by more favourable pricing despite the economic challenges faced in the UK.
The increase in external funding appetite among SMEs is mostly because of lower interest rates, followed by business confidence, greater appetite from lenders and improvements in lender policy.
The report shows brokers reporting that purchasing a property is a powerful driver for SME borrowing, with almost half of the loans taken out by businesses fuelled by property purchase reasons.
Nearly one-fourth of businesses said they had had trouble getting SME funding, a slight improvement from a previous survey, when almost one in three reported accessibility problems.
Despite this improvement, there is a substantial number of SME borrowers that need to address issues to raise the necessary funds for their businesses.
The new survey shows that SME attitudes are changing, with businesses recognising the opportunity to leverage lower interest rates compared to last year, said David Castling (pictured), Atom bank’s head of intermediary distribution.
He noted, however, that small businesses are “hugely important to the economy,” adding that SMEs can only thrive if they can raise the funds they need.
“That is why it’s so crucial for brokers to work with lenders who are genuinely committed to this sector, with the products and processes in place to provide swift funds and certainty to SME borrowers,” Castling added.
