iwoca releases SME Expert Index

iwoca has released its quarterly SME Expert Index of UK Brokers which showcases that small business owners are feeling optimistic about economic conditions for growth.

The Index reveals that over a third (35%) of brokers reported the top motivator for applying for unsecured finance was to ‘grow the business’ – a 12 percentage point increase from the previous quarter. For the first time since the Index was launched, ‘managing day to day cash flow’ was not the most requested reason for applying for unsecured finance, dropping by 6 percentage points on the previous quarter. There was also a decline in the number of SMEs citing ‘recovery from lockdown or closure’ or to ‘bridge occasional cash flow gaps’ as a reason for needing finance. 

iwoca’s Q3 SME Expert Index is based on insight from UK brokers who collectively submitted over 1000 applications for unsecured finance on behalf of their SME clients over a four-week period in August 2021. Prior to the extension of the government-backed Recovery Loan Scheme (RLS), almost 40% of brokers report that they saw an increase in demand for the scheme compared to Q2. One in seven brokers (14%) saw demand increase significantly – submitting 50% or more applications compared to the previous four weeks. 

Broker respondents collectively had approximately 1800 of their customers specifically requesting an RLS loan over the four-week period in August 2021. With more fintechs and banks receiving RLS accreditation, 75% of brokers submitted a client application to an accredited RLS lender. This compares to 20% in Q2, when brokers opted instead to wait for more lenders to be accredited or applied for a non-government backed product.

A third (33%) of brokers said that they had submitted more lending applications for unsecured finance compared to the four weeks prior, suggesting that more businesses are looking to finance their growth. The Index found that demand for loans under GBP 25,000 had almost doubled compared to the second quarter, making it the most requested amount in Q3 (32%). Just over half (51%) of respondents said that they had applied for less than GBP 50,000 on behalf of their clients.