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
N26 introduces MoneyBeam to UK users
N26 has introduced MoneyBeam to its UK users which will enable them to instantly send money to other users of the mobile bank...
NatWest names new CEO for Mettle
NatWest has named Marieke Flament (pictured above) as the CEO of its SME digital banking subsidiary Mettle...
CYBG to rebrand as Virgin Money and launch a new business current account
CYBG has revealed that it will rebrand to Virgin Money over the next two years with new Virgin Money-branded products...
New bank Chetwood Financial reveals long-term ambitions
Chetwood Financial is aiming to use technology to offer better deals to customers, having secured a banking licence late last year...
The opportunity for accountants to help businesses
In light of bank and building society branch closures, a new report published by Oxford Economics in partnership with Funding Circle has revealed that in the UK — despite the vast economic output generated by SMEs — small business lending accounts for only 2% of banks’ balance sheets...
Paragon Bank’s structured lending team passes £100m milestone
Paragon Bank’s structured lending team has passed its £100m milestone 18 months after launching...
Hanley Economic expands intermediary support team
Hanley Economic Building Society has appointed Kate McKeon (pictured above) as an intermediary sales assistant...
Gatehouse Bank names new direct adviser
Gatehouse Bank has appointed Robert Siddall (pictured above) as a direct adviser...
British Business Bank increases facility with Simply to £180m
Non-bank lender Simply has received a third facility of £60m from the British Business Bank under the latter’s ENABLE funding programme...
OakNorth provides facility for cloud platform provider acquisition
OakNorth has provided a loan to managed service and cloud platform provider Oncore IT for the acquisition of Fuse Technologies...
Monzo to launch first USA accounts this summer
Monzo has announced it will be launching its first accounts in the USA this summer...