Commercial brokers are reporting continued appetite for SME finance even as uncertainty around the wider economy tempers confidence, according to new research.
A survey conducted by SME funder Asset Advantage shows that commercial brokers hold mixed views on the UK economy over the next 12 months, a backdrop which is shaping how small and medium-sized enterprises approach borrowing and growth.
Almost half of brokers surveyed (49%) said they are neutral on the economic outlook, while 28% expressed a pessimistic view. Just over two-in-10 reported feeling optimistic, reflecting the challenging environment in which many SMEs are making funding decisions.
Brokers highlighted a range of pressures affecting their clients, including taxation, inflation, rising operating costs and subdued business confidence, all of which are influencing demand for finance and the pace at which deals progress.
One broker points to “cashflow and uncertainty” as the main challenges, saying: “Decisions are taking longer as businesses feel the pinch and have to be careful with additional investment.”
Another broker adds: “Inflationary pressures mean businesses make lower profit which in turn affects their serviceability and ability to borrow.”
OPTIMISTIC OUTLOOK
Despite this cautious backdrop, Asset Advantage’s research suggests brokers remain positive about opportunities in SME finance, with strong expected demand for asset finance and funding to support business acquisitions.
Gary Thompson, sales director at Asset Advantage, says: “While there’s still very much strong demand for business funding, there’s no doubt that many businesses are feeling cautious in the current climate.
“Big factors such as higher operational costs, inflationary pressures and both geopolitical and economic uncertainty all continue to have an impact on business confidence and influence borrowing and investment decisions.
“Against this backdrop, the case for flexible funding options from pragmatic and forward-thinking funders becomes ever clearer.
“Working with expert commercial brokers, specialist funders who are willing to support complex, growth-focused deals will be key to giving SMEs the confidence they need to push ahead with their expansion plans.
“Brokers play a critical role in fostering confidence among their clients and demonstrating what is possible. To ensure they can continue doing this, they need the support of specialist funders and providers.”
Asset Advantage works with commercial finance brokers to provide funding of up to £500,000 to UK SMEs, specialising in asset finance and business loans.
Funding is used to acquire hard and soft assets and to support business acquisitions and management buy-outs, with flexibility across sectors where serviceability and risk remain strong.
The provider is also planning a regional broker roadshow in Manchester, London and Birmingham, designed to help brokers structure SME finance deals more effectively.
