Economic uncertainty is on the rise for the UK’s small and medium-sized enterprises (SMEs) following the Autumn Budget, according to iwoca’s Q3 2024 SME Expert Index.
The iwoca report noted that the percentage of UK based brokers reporting pessimism among their SME clients about the future has more than “doubled, rising from 15% last quarter to 34%.”
The research report from iwoca also mentioned that only one in three (36%) brokers report that small and medium-sized firms feel optimistic, “down from 56% in the previous SME Expert Index.”
Mirroring this “anxiety, concerns about economic downturns” have resurfaced among small and mid-sized companies, with nearly “half (47%) of brokers saying SMEs are concerned about the possibility of a recession.”
This has risen from 35% and marks a reversal of a year-long trend in which brokers “reported that recession concerns had steadily decreased.”
Amid mounting financial pressures, SMEs are shifting “focus from growth to survival.”
Managing cash flow is now the top reason for loan applications, “cited by 61% of brokers—up from 49% a year ago.”
In contrast, only 36% of brokers say their SME clients are “seeking loans to drive growth, the lowest proportion recorded since Q3 2023.”
This shift underscores the immediate need “for financial stability as economic challenges intensify.”
As SMEs grapple with rising costs and economic uncertainty, “demand for larger loans is on the rise.”
Nearly half (45%) of brokers anticipate a significant “increase in applications for loans exceeding £100,000 over the next year, up from 28% last quarter.”
High-value loans are becoming increasingly important, with “15% of brokers expecting growth in loan applications above £200,000.”
Reflecting this trend, iwoca recently doubled the “maximum amount available through its flagship Flexi-Loan, allowing SMEs to apply for up to £1 million in finance.”
Colin Goldstein, Chief Commercial Officer, UK at iwoca, commented: that rising pessimism and fears of a recession “are reshaping SME mindsets, with a greater focus on survival over growth.”
They’ve seen a surge in demand for larger loans “from businesses looking for extra financial stability in uncertain times.”
At iwoca, they help businesses get the funds they need, “when they need it, often within minutes.”
They’ve reportedly made several billion in funding available to 100,000+ businesses since they launched in 2012.
Their mission is to “finance one million businesses”
They’ll get there by continuing to make their finance relevant and accessible to more businesses by combining “technology, data science and a 5-star customer service.”
About the data
The SME Expert Index is taken from a survey carried out with more than 200 brokers who’ve collectively submitted “over 5,300 applications for unsecured finance on behalf of their SME clients across the UK over a four week period in November and December.”