iwoca’s Q4 SME Expert Index is based on insight from UK brokers who collectively submitted over 3500 applications for unsecured finance on behalf of their SME clients over a four-week period in December.
The index reveals that close to half (43%) of brokers saw financing for growth as the most common purpose for a loan among SMEs. This is the second consecutive quarter that SMEs have cited growth as their primary focus, and it’s an upwards trend (up from 35% in Q3).
As economic fears around the spread of the Omicron variant begin to dissipate, fewer than one in ten (9%) brokers reported ‘recovery from lockdown or closure’ as the most common loan purpose for SMEs. This represents a decrease of 11% since the last quarter, hinting that small business preoccupation with shorter term Covid concerns has evolved into ambitions for expansion.
These shifts in priorities reflect a change in confidence in the economy over the past year. In the first quarter of 2021, only 25% of brokers cited growth as the most common reason for finance, compared to 43% in Q4. Similarly, whilst 41% pointed to managing cash flow as a primary reason in Q1, this has fallen to 24% as COVID restrictions ease and businesses look forward to life post-pandemic.
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