Proprietary data from Funding Options, operating in the realm of business finance, shows thousands of SME customers “hunkering down” for a bleak economic winter. In October, the platform recorded the highest number of credit approvals since January 2021 and the highest combined value this financial year, with £22m ($26.6m) of loans approved in the month.

With small businesses facing a ‘perfect storm’ caused by macroeconomic factors that have led to increased inflation, high energy rates and a higher cost of living, Funding Options’ data suggests that the lending market remains active and that strong and well-managed businesses are planning for all scenarios. Drawdown levels dropped slightly, with some businesses appearing to secure finance today in order to access it at that rate ‘tomorrow’. 

The business finance marketplace – which works with more than 120 active lending partners – saw the highest volume of drawdowns on term loan, revolving credit facilities and Merchant Cash Advance products. In a Funding Options-commissioned survey of 1,000 small business owners, carried out by global insight-driven research company Censuswide, three-quarters of businesses (75 per cent) are actively seeking finance and 84 per cent remain confident of survival.

Respondents highlighted energy price hikes, supplier costs, and interest rates as the biggest pressures they face, but evidenced their resilience when sharing the primary purpose for securing capital. Company owners said that their three biggest reasons for securing finance were: to expand business operations; invest in plant, machinery or premises; and to cover employee salaries. There was also a sense of realism, with 68 percent of companies admitting they expect to make redundancies.

Funding Options CEO, Simon Cureton, commented: “What we can clearly see from this data is a sense from small businesses that this time they won’t be bailed out. Within the market we are seeing that the availability of the Recovery Loan Scheme (RLS) is lower than hoped despite the government offering guarantees to lenders. It is reassuring, therefore, to see much higher application and approval rates on loans, with our data showing that sustainable businesses will still be supported by lenders. Anecdotally, we are seeing an increase in lenders requiring personal guarantees and interest rate increases are causing the funding costs of lenders to rise, but as we know, this is unfortunately the case in every aspect of our lives and work. The positive is that we are not seeing a contraction in the market for stable and well-organised businesses. Government figures state that SMEs contribute over 52 per cent of the UK’s annual turnover, so these vital businesses need to be backed to the fullest by the market if we are to bounce back faster.”

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