SME lending returns to pre-pandemic levels, say 30 per cent of brokers

By John Reynolds on Wednesday 4 May 2022

Alternative Lending

Iwoca’s latest SME Expert Index also found that managing day-to-day cash flow became increasingly important to SMEs in Q1 2022, with nearly one in three brokers (31 per cent) identifying it as the most common motivator for applying for finance.

SME lending returns to pre-pandemic levels, say 30 per cent of brokers
Image source: Colin Goldstein/Iwoca.

The SME lending market has returned to pre-Covid pandemic levels, according to nearly one in three brokers (30 per cent) who took part in a major survey.

The data, from alternative lender Iwoca, also found that nearly another third (31 per cent) believe the market will return to pre-pandemic within six months, based on the number of loan requests they had each month before the pandemic.

Further findings from the data include that over a third of brokers (34 per cent) reported an increase in loan applications submitted in April compared to March.

Iwoca’s latest SME Expert Index also found that managing day-to-day cash flow became increasingly important to SMEs in Q1 2022, with nearly one in three brokers (31 per cent) identifying it as the most common motivator for applying for finance.

It marked the first time that cash flow management had risen month on month, a significant shift in the downward trend it has followed since the index began in Q1 2021, and a seven per cent point increase on Q4 2021 when 24 per cent listed cash flow as the top motivator. 

Iwoca says: “This suggests the spike in lending activity could be attributed to small businesses’ escalating need for finance as they navigate the increasing cost of doing business, including rising energy prices and inflation.”

The index is based on insight from UK brokers who submitted over 3300 applications for unsecured finance on behalf of their SME clients in March.

The survey also found that small businesses were looking to access smaller bridging loans with the most commonly requested loan size for SMEs in Q1 2022 being under £25,000. 

In Q4 2021, by contrast, the most commonly requested loan size lay between £50,000 and £200,000.

Colin Goldstein, commercial growth director of Iwoca, said: “While it’s reassuring to see the lending market returning to pre-pandemic levels of activity, the inflation crisis is taking its toll on small businesses who are feeling the pinch. 

“Rising fuel and energy costs are the main cost pressures hampering SMEs ability to combat what is expected to be a weaker than expected year of economic growth. As small business owners prepare themselves for cash flow issues in the coming months, it’s vital that lenders offer flexible finance to help them through this.”

Sign up for our newsletters


Your daily 7am download of all things alternative finance and fintech.

Fintech and alternative finance headlines with an exclusive Editor's Note each week. Delivered Monday at midday.

AltFi's new weekly US newsletter breaking down the ins and outs of America's burgeoning fintech sector. Delivered Monday 9am EST/ 6am PST.