SMEs expecting business funding to become harder to find post Brexit

A recent report suggests that 34 per cent of small and medium-sized enterprises (SMEs) expect access to funding to become more difficult once the UK leaves the European Union and only three per cent believe it will get easier.

According to the British Business Bank’s Small Business Finance Markets report, the smallest businesses in the UK are the most pessimistic about the prospect of access to funding, with 29 per cent last year expecting Brexit to have a negative effect compared with only 22 per cent in 2017.

This sentiment is reflected in the demand for external finance, which has continued to fall, with only 36 per cent of smaller firms using external finance in 2018 compared with 44 per cent in 2012.

The report found that the total amount of bank lending available remained the same, at £166 billion, and gross bank lending, which makes up the biggest proportion of business finance, averaged £14.4 billion per quarter. Repayments totalled £14.3 billion per quarter, so banks lent fractionally more than was repaid.

Meanwhile, the growth of alternatives to bank finance has continued, albeit at a slower pace. Asset finance grew by just three per cent in 2018, compared with 10 per cent in 2017. At the same time, peer-to-peer (P2P) business lending grew by 18 per cent, compared with 51 per cent growth in 2017.

However, the awareness of alternative finance options has grown, with more than half of smaller businesses being aware of P2P lending, a rise from 47 per cent in 2017. There was also an increase in the awareness of crowdfunding over the past year, from 60 per cent to 70 per cent and in venture capital, which rose from 62 per cent in 2017 to 69 per cent last year.

If you are concerned about the potential impact Brexit will have on your businesses’ ability to seek vital funding, then contact our experts today for a discussion on the options available to you.

 

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