Brokers emerge from crisis ready to grow
Brokers are poised for significant growth as the UK emerges from the Covid-19 lockdown, according to new research from Investec Asset Finance.
Investec’s annual report – the largest of its kind – surveyed more than 100 brokers in the UK in the first half of 2021, finding that 71 per cent expected their business volumes to increase in the next 12 months.
How brokers made it through the crisis
The vast majority of brokers either maintained (66%) or grew (8%) staff numbers, with just a small minority (26%) shrinking their teams. That means they’re now in a position to activate growth plans as we exit lockdown – more detail on that below.
“We saw brokers take a really thoughtful look at their businesses, and focus on areas of strength,” explained Investec’s Wesley Harfield. Asked which sectors were focused on, brokers were strategic, choosing those that were thriving even during the worst of the Covid-19 pandemic, primarily:
- Construction (27%)
- Transportation and storage, including postal (22%)
- Production and manufacturing (10%)
However, boosted by the availability of government schemes, brokers stepped up to provide support for sectors hardest hit by the pandemic: 35% had focused on leisure and hospitality, including hotels, restaurants and bars. This is a material increase compared to 2018 (26%).
Brokers were able to access CBILS through a range of lenders, including Investec, to support their clients through times of uncertainty. Investec’s research showed that for 30% of brokers, CBILS lending made up more than half of their volumes last year, including both CBILS asset finance and CBILS loans.
With the worst of the Covid-19 pandemic hopefully behind them, brokers are firmly focused on growth for the year ahead. Nearly three quarters (71%) expect their business volumes to increase in the next twelve months, and that increase is mirrored in recruitment, with more than a third (37%) already planning to increase headcounts.
Asked to list the most significant opportunities ahead of them, brokers set out:
- Growth within specific sectors, such as construction and manufacturing
- General UK recovery and pent-up demand
- Business streamlining and efficiency
- Asset finance for new investments
- Increased activity within the UK following Brexit
While the cost of finance remains an important priority for end clients, they also value the ability to easily access lending, especially given disruption caused by Covid.
The majority of brokers surveyed backed measures set out in the 2021 Budget, and expect SMEs to get back on track within a year or less. However, areas for improvement suggested by brokers included further support to SMEs and sole traders, including incentives to keep staff and a relaxation of asset limitations on the super-deduction scheme.
Investec’s Wesley Harfield commented: “This report shows the resilience of brokers, who stepped up to deliver for their clients in 2020 and are now getting ready for real growth in the second half of 2021.”
“It also shows the pressures brokers are under, in order to get things done for their clients. For example, speed of payout came out as a key requirement when brokers were asked about the most important factors in choosing a funder. We put a great deal of emphasis on quick payouts, as delays here can affect clients’ ability to purchase business-critical assets.”