NACFB brokers see SME borrowing return to 2019 levels
NACFB Members helped originate £40.9bn of borrowing by SMEs last year, the annual survey from the UK’s largest trade body for commercial finance brokers has revealed.
Survey findings point to a return to 2019’s funding levels, with the average size loan facilitated by Members in 2021 standing at £458,582, up 17% on the year before, and surpassing 2019’s average loan size of £450,145.
The results showed that the most common reason a client’s loan application had been declined was that the sector had been ‘deemed too risky’ by the lender.
Funding growth enterprises
Survey respondents ranked UK regions in order of where their clients’ funds had been utilised. The East Midlands came out on top followed by Greater London. The East Midlands remains the heart of UK manufacturing and advanced engineering, accounting for 20% of UK manufacturing output. The South and East of England came in third and fourth place respectively.
The national trade body’s members reported a decline in enquiries from SMEs in both the retail and hospitality sectors, but also predicted a return for hospitality loan enquiries in 2022. Members also anticipate an increase in requests for finance in the construction sector. In total, the Association’s members welcomed 146,885 new SME clients last year, an average of 146 per brokerage.
Continued Covid lifeline
In place of BBLS, CBILS, and CLBILS, 2021 heralded the arrival of the Recovery Loan Scheme (RLS), the state backed Covid loan scheme facilitated by the British Business Bank. The average size RLS facility via an NACFB member stood at £539,281 – over twice the size of the average sized CBILS loan in 2020 suggesting that when businesses needed state-backed funding in 2021, their need was comparatively greater than in the year before.
However, engagement with the RLS was lower than many expected. Of the NACFB members that engaged with the scheme, on average only 11 deals per brokerage were placed through it. Half (49%) of members said the main reason for reduced scheme activity was a lack of direct RLS enquiries, whilst 16% said their clients simply did not meet the scheme’s criteria.
The full survey results are available in the latest issue of the Association’s monthly magazine, Commercial Broker, available online here.
Reaction to survey findings
NACFB chair, Paul Goodman, responded to the survey results: “The data proves what we in the industry have long known, which is just how vital the intermediary-led route to market is for the UK’s 5.6 million SMEs.
“The trade body continues to forge stronger and deeper cross-party relationships within government, as well as the British Business Bank and the Bank of England. We will engage with any stakeholder that needs to know more about the essential work NACFB members undertake,” Paul added.
Commenting on the survey findings, Nick Baker, managing director for intermediaries at UK challenger lender, Allica Bank said: “Brokers have continued to be a vital source of expertise and market knowledge for SMEs throughout the pandemic. Unprecedented business interruptions, government funding schemes, and with some lenders pulling back from new lending has created an even more complex funding market than before. These figures from the NACFB show just how clearly the business community have appreciated that support.”
