More than two-fifths (42%) of commercial brokers have found it difficult to get the finance their clients need, according to Atom Bank’s SME Pulse survey.
The bank conducted research among the commercial broker community looking at SME access to finance and what was driving small business owners to borrow amid the current economically challenging backdrop.
Half of the brokers surveyed felt the introduction of new technology could improve SMEs’ access to credit.
The most popular pieces of technology commercial brokers thought would be beneficial were instant agreements in principle (72%), automated eligibility decisioning (65%) and open banking (44%).
Nearly half (48%) of brokers surveyed felt that SME appetite for external finance was increasing, with the majority (59%) believing the main reason for this was a rise in business confidence.
More than half (53%) of brokers stated the main reason SMEs were taking out loans were for growth and business expansion.
Since the end of April, Atom quoted over £0.5bn in new lending, but noted that customers were taking a more considered approach when selecting the right finance solution.
Equally, 16% of brokers surveyed felt there was a slowdown in SME demand for external finance.
Higher interest rates (93%) were perceived to be the main driver, alongside economic uncertainty (60%) and a decreased appetite from lenders (60%).
May saw corporate insolvencies in England and Wales jump by 40% year-on-year as businesses struggled with the hike in borrowing costs, a tight labour market and high energy bills.
With the Bank of England base rate tipped to reach 6.25% this year, Atom Bank said interest rates and inflation will continue to pose a challenge, in particular stretching stressed affordability thresholds for borrowers.
Tom Renwick (pictured), head of business lending at Atom bank, said: “Looking at the businesses we have worked with, plenty of firms are looking to expand despite choppy conditions, and it’s up to lenders and brokers to provide easy access to the funding they need.
“The wider industry has lagged behind the technological leaps made in the mortgage market for a long period of time, but is crying out for a step change in terms of speed, ease and certainty.
“Automated decisioning and timely access to financial information to allow lenders to facilitate this are key to delivering the service that customers and brokers demand.”
He added: “Small businesses have had a difficult few years, so it’s encouraging that some of the brokers on our panel are seeing business confidence returning and more SMEs looking to expand.
“These businesses are the lifeblood of the UK economy, so we continue to work together with brokers to support and grow as many of the nation’s small businesses as possible.”
