SMEs should be confident in approaching their bank for finance, according to UK Finance.
The comment follows BDRC’s latest SME Finance Monitor for Q2 2018, which found that 85% of SME finance applications reported in H1 2018 resulted in a facility.
The report also found that eight in 10 SMEs were satisfied with the way applications were handled and the final outcome.
The majority of applications for new/renewed facilities (67%) and for a loan or an overdraft (60%) were made to the SME’s main bank.
Some 17% of applications were made to another existing provider, 7% to a new provider, 4% to an online platform and 5% elsewhere.
Around a third of applications were made online (37%), more often by smaller SMEs, while most applications (76%) were in the name of the business rather than a personal name.
The research found that out of the 85% of applications resulting in a facility, 72% were offered the facility SMEs wanted and took.
Some 4% of applications saw the SME offered a facility that they declined and, in 12% of cases, the application was declined by the provider.
On a very small base, there was limited recall of the appeal or referral processes among SMEs declined by their bank.
“These figures show SMEs should be confident in approaching their bank for finance, as 85% of applications are successful,” said Stephen Pegge, director of commercial finance at UK Finance.
“It is encouraging to see six in 10 SMEs have a high level of trust in their main bank, which UK Finance and its members are working hard to improve further.”
The report also highlighted that in H1 2018, 34% of SMEs were using external finance, down from the 38% reported in 2017.
Chirag Shah, CEO at Nucleus Commercial Finance, felt that businesses shouldn’t shy away from what external finance could help them to achieve.
“With only a third of SMEs (34%) using external finance, there are many who are letting opportunities pass their business by.
“This may be holding back their expansion, restricting head count and denting profits.
“…Businesses shouldn’t be afraid of exploring external finance options, especially as the data also shows us that 85% of applications are successful.
“As an industry, we need to support businesses in understanding the many options available to them to help them reach their full potential."
SIGN UP TO OUR NEWSLETTER TO RECEIVE MORE NEWS LIKE THIS STORY
Gravity selects Finastra to power banking and lending services
Gravity has selected Finastra’s Fusion Essence in the cloud solution for its end-to-end core banking capabilities...
An interview with Paul Stockwell: Islamic finance has ‘enormous opportunity’ for growth over coming years
In an interview with Specialist Banking, Paul Stockwell, chief commercial officer at Gatehouse Bank (pictured above), discusses increasing awareness of Islamic finance and opportunities in the banking world...
Revolut for Business launches expense management tool
Revolut for Business has launched a new expense management tool designed to simplify the handling of expenses for growing businesses...
Leek United strengthens intermediary team
Leek United Building Society has strengthened its intermediary team with five new appointments...
BCR awards £10m to Atom bank
Atom bank has received a £10m grant as part of the Capability and Innovation Fund Pool C grants announced by the board of Banking Competition Remedies (BCR)...
Bank of Ireland UK updates broker portal
Bank of Ireland UK has revealed that it has relaunched its broker portal...
Unity Trust Bank increases lending by 47%
Unity Trust Bank has reported an underlying pre-tax profit of £4m in H1 2019, an increase of £1.2m compared with H1 2018...
Taxing times for SMEs
Small business owners are the most creative and resilient individuals I know...
Metro Bank to open first store in the Black Country
Metro Bank is set to open two stores on 20th and 21st September in Solihull and Merry Hill...
TMA Club adds Harpenden Building Society to lender panel
TMA Club has added Harpenden Building Society to its lender panel, giving its members access to the building society’s range of mortgage products...
N26 appoints chief banking officer
N26 has appointed Thomas Grosse (pictured above) as its new chief banking officer...