European Fintech iwoca Shares SME Expert Index: Businesses Focus on Growth, Turn to Recovery Loan Scheme

Small business owners are feeling “optimistic” about economic conditions for growth, according to iwoca’s quarterly SME Expert Index of UK brokers.

The Index reveals that more than a third (35%) of brokers reported the “top motivator” for applying for unsecured finance was “to ‘grow the business’ – a 12 percentage point increase from the previous quarter.”

As mentioned in an update shared with CI:

“For the first time since the Index was launched, ‘managing day to day cash flow’ was not the most requested reason for applying for unsecured finance, dropping by 6 percentage points on the previous quarter. There was also a decline in the number of SMEs citing ‘recovery from lockdown or closure’ or to ‘bridge occasional cash flow gaps’ as a reason for needing finance.”

iwoca’s Q3 SME Expert Index is based on insight from UK brokers who collectively submitted more than 1000 applications for unsecured finance “on behalf of their SME clients over a four-week period in August.”

Demand for government-backed finance increases

Before the extension of the government-backed Recovery Loan Scheme (RLS), nearly 40% of brokers report that they saw “an increase in demand for the scheme compared to Q2.” One in seven brokers (14%) saw “demand increase significantly – submitting 50% or more applications compared to the previous four weeks,” the announcement revealed.

Broker respondents collectively had around 1800 of their clients “specifically requesting an RLS loan over the four-week period in August.”

The update also mentioned:

“With more fintechs and banks receiving RLS accreditation, 75% of brokers submitted a client application to an accredited RLS lender. This compares to 20% in Q2, when brokers opted instead to wait for more lenders to be accredited or applied for a non-government backed product.”

Growing demand for unsecured finance

A third (33%) of brokers said that they had “submitted more lending applications for unsecured finance compared to the four weeks prior, suggesting that more businesses are looking to finance their growth.”

The update further noted:

“The Index found that demand for loans under £25,000 had almost doubled compared to the second quarter, making it the most requested amount in Q3 (32%). Just over half (51%) of respondents said that they had applied for less than £50,000 on behalf of their clients.”

Colin Goldstein, Commercial Growth Director of iwoca, stated:

“The latest findings from our SME Expert Index are encouraging; it’s great to hear from brokers that the small businesses they work with are beginning to feel more confident about their future.”

Goldstein added:

“SME owners, brokers and lenders will welcome the decision by the Treasury to extend the Recovery Loan Scheme, particularly as demand continues to increase. Our economic recovery relies heavily on our six million small business owners, so it’s key that companies like iwoca continue to provide them with access to finance, including the government- backed Recovery Loans.”

As noted in the announcement, this SME Expert Index from iwoca offers  “a snapshot on what’s driving small business owners to borrow, the trends seen in the types and value of finance being accessed, and how these patterns change as the country emerges from the pandemic.”

iwoca releases this index each quarter to “capture the experience of brokers working with small businesses,” the update explained.

iwoca is accredited to the Recovery Loan Scheme, having distributed almost £400 million to small businesses via the UK Government’s Coronavirus Business Interruption Loan Scheme (CBILS).


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