"Given reduced appetite amongst high-street banks, it’s no surprise that SMEs are turning to alternative finance options"
40% of UK SMEs claim it is easier for them to access finance from fintech lenders rather than mainstream banks, according to new research from Sonovate.
Alternative finance options increasingly offer a lifeline for UK SMEs, with seven in ten (70%) saying they wouldn’t have survived the current cost of living crisis if it wasn’t for these types of lenders.
In addition, two-thirds (65%) more SMEs are experiencing more difficulty in accessing finance from high-street banks than they were in 2022.
The latest data from UK Finance suggests a reduced appetite amongst high street banks to lend to SMEs, with gross lending dropping to a post-pandemic low of £3.7bn in Q1 2023, half of the £7.6bn two years before, and dipping further to £3.6bn in Q2.
With costs continuing to rise and energy bills expected to spike again this winter, SMEs say more needs to be done to unlock access to alternative funding solutions with calls for the government to play an increasingly leading role. Two thirds (64%) of SMEs say there needs to be more government guidance about the funding options for small businesses.
Richard Prime, co-founder and co-CEO of Sonovate, commented: “Given reduced appetite amongst high-street banks, it’s no surprise that SMEs are turning to alternative finance options as they pursue growth plans and continue their post-pandemic recovery.
“Fintech lenders are successfully disrupting the incumbents due to a greater understanding of the specific funding needs of SMEs but also the ability to quickly offer on-demand funding solutions. This approach allows fintechs to offer quicker finance decisions than the established market players, empowering the UK’s innovative SMEs to concentrate on growth and generating revenue rather than seeking funding.”