A new study by Walker Morris reveals a large number of UK SMEs are “unable to secure funding from traditional lenders” post Covid.
In Brief:
The study found 77% of SMEs have failed to secure traditional bank financing.
Despite this, almost 40% of SMEs have stated they plan to grow over the next 12 months.
Around half of these businesses have said they are concerned about using alternative finance providers.
What does this mean?
The research shows that there is a huge market for alternative lenders to support SMEs where traditional banking cannot.
However, there are several barriers in place to this, says Walker Morris, especially concerns over changes in market dynamics and the potential impact on the SME; unregulated lending or potential regulatory loopholes; and higher interest rates or alternative lenders being perceived as not competitive against banks.
James Crellin, Director in the Finance Group at Walker Morris, commented:
“Alternative finance is arguably the key to helping the economy get back on its feet and grow following the challenges businesses, particularly SMEs, faced during Covid-19. However, it’s undeniable that there are many hurdles SMEs face when it comes to securing funding – and it’s clear that the perceived risks around insecure finance and of regulatory loopholes with alternative finance providers is a huge barrier. These concerns are of course based on SME’s impression of alternative lenders, and by no means the reality of alternative finance.”
