SMEs more confident in taking larger loans, report shows

Thursday 3 February 2022 13:37 CET | News

Small business owners are feeling confident about taking on larger amounts of finance to support their growth ambitions in 2022, according to iwoca’s quarterly SME Expert Index.

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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Keywords: study, SME lending, report
Categories: Banking & Fintech
Countries: United Kingdom
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Banking & Fintech

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