28 February 2020 – The time it takes for SMEs to secure funding has fallen by a quarter in the last two years, according to latest figures from business lending marketplace, Funding Xchange.
One in six businesses with good credit profiles can now access a new facility within 24 hours
- Less than a third of successfully funded companies wait longer than 3 weeks
- Market will move to instant decisioning ‘within 2 years’
Between 2018 and 2019 the average time between a funding offer being made and finance being drawn down fell from 19 to 14 days, driven by digital-first lenders streamlining their decisioning processes, which is creating transparency and driving competition – including more affordable products at lower interest rates – in the SME lending market.
The figures come from the second SME Lending Monitor, which shows that businesses using Funding Xchange’s marketplace with strong credit profiles are benefitting the most from changing market dynamics. Of this group of customers, half can now draw down within 10 days of application and 15% within just 24 hours – up from just 1% in July 2018. The benefit of faster funding extends also to more complex cases, with 70% of Funding Xchange customers being funded within three weeks – up from 62% in 2018.
Almost one in two SMEs apply for finance a week before or after it is needed, and historically the majority of businesses talked to only one lender, limiting their access to a broader range of funding solutions. The government referral scheme, which launched in 2016, instructs banks to send unsuccessful applicants to designated platforms including Funding Xchange, where high quality customers receive an average of 5.3 personalised offers from a panel of lenders.
To deliver improved funding solutions for SMEs, Funding Xchange has partnered with data analytics, cloud accounting and banking software providers including ezbob, whose decisioning technology allows applications to be processed in as little as seven minutes. It also recently added Open Banking capabilities to its platform by integrating AccountScore, a tool that allows customers to connect their banking information with lenders without having to fill out paperwork.
Katrin Herrling, CEO and co-founder of Funding Xchange, said: “With SME confidence still recovering from an unstable political and economic environment, it is crucial that businesses with an immediate need can continue to seek and find access to the best sources of funding.
“The accelerating speed of digital decisioning is transforming the market, creating more transparency, competition, and ultimately speed. The best customers can now get confirmed offers within minutes – giving them the experience that they have become accustomed to as consumers.
“We expect significant leaps in the next 18-24 months as new data sources and technology, including Open Banking and cloud accounting, enable the delivery of end-to-end and instant decisioning for SMEs seeking funding of up to £50k.”
Yaron Shoshani, CTO of ezbob added: “We have integrated with Funding Xchange to enable customers to go from application to decision in minutes. Once we’ve verified details and received the customer's signed documentation, our digital solution can process funds on the same day – often within the hour."
The Funding Xchange Lending Monitor captures borrowing and lending trends from over 30,000 SMEs and over 45 business finance lenders across the country.
