Brexit viewed as both a challenge and opportunity by commercial finance intermediaries

10-Sep-2019


In order to determine the challenges as well as opportunities in the market and to explore ways to plug the funding gap, business loan provider Spotcap surveyed 132 commercial finance intermediaries over the course of July, with the support of industry organisations NACFB and FIBA

Key survey findings include:

  • Commercial finance intermediaries are divided on Brexit. One out of four respondents consider it a key challenge, while one fifth believe that it will bring new business opportunities
  • Commercial finance intermediaries have a positive future outlook. 77% of respondents believe that the number of loans they broker will increase; more than half of these even go so far to say that they believe it will rise by a lot
  • Property, professional services, construction and manufacturing are perceived as the key industries for business growth
  • The number of documents required to process an application is viewed as a barrier. This is closely followed by generating new business and understanding the offering of different lenders

According to recent statistics from UK Finance, UK lenders approved over 290,000 loans and overdrafts to small and medium-sized businesses (SMEs) in 2018, worth £28bn in total. Commercial finance intermediaries, including brokers, accountants and business advisers, are often the invisible hand in these transactions. They play a crucial role in helping UK businesses source the right funding from all the different options offered.

However, despite the healthy size of the SME loan market in the UK  there is still a £22bn funding gap, with many businesses struggling to obtain capital for their needs , according to the Bank of England. What’s more, recent stats from the British Business Bank highlight the importance of commercial finance intermediaries stating that businesses receiving external support when looking for funding are  25% more likely to become high-growth companies. 

Commenting on the survey findings, Niels Turfboer, managing director at Spotcap, said: “Commercial finance intermediaries are an important part of the SME funding jigsaw. The survey insights show that there is a lot of potential for them to help fill the  £22bn funding gap. The more adaptable and open-minded to change intermediaries – and lenders – are, the better and faster they can compete and grow their business.“

Adam Tyler, the executive chairman at FIBA, the Financial Intermediary & Broker Association, adds: "We benefit hugely from such a wide range of lenders and to know that SMEs are still not aware of the choice is very disappointing. My own research has revealed similar shortfalls and the more we can do collectively, the more small businesses can get the funding they require."

Graham Toy, CEO of the National Association of Commercial Finance Brokers, responded to the findings: “The research chimes with our own view of the commercial finance broker’s role in supporting and advising business borrowers. Brokers have a positive outlook partly because they remain instinctively agile, with many of them having weathered the unpredictability of a post-2008 world.

Spotcap collected the main survey findings in a short report. To download the PDF, please click here: