The latest BDRC Continental quarterly SME Finance Monitor investigated the availability of external finance for the UK’s small and medium-sized enterprises (SMEs) to the end of Q4 2013. The research is reputed to be the largest and most frequent study of its kind in the UK, with findings now based on more than 55,000 interviews with SMEs.
The key findings:
- Firstly, whilst it might surprise many SME owners, most applications were successful! Around 7 out of 10 of all loan and overdraft applications each quarter have resulted in a facility.
- Those renewing an existing facility were twice as likely to be successful (96% of those renewing Q3 2012 to Q4 2013 now have a facility), as those applying for new funds (48% of those applying for new money Q3 2012 to Q4 2013 now have a facility).
- As in previous years, smaller, younger SMEs and those applying for the first time were less likely than other applicants to be successful. Success rates for first time applicants in 2013 to date are also lower than in previous years, with 60% of first time applicants ending the process with no facility (up from 51% in 2012). Is the gap systemic or is better support for first time and perhaps inexperienced applicant SMEs at this stage a priority need?
- Future appetite for external finance and presumably the processes and hurdles to be navigated and overcome also remained limited. Confidence that future applications could be successful has remained lower than current success rates would suggest.
- 15% of SMEs planned to apply for new or renewed finance in the 3 months after interview, in line with previous quarters.
- 41% of potential applicants in Q4 2013 were confident that their bank would agree to a future request, unchanged from Q3. Confidence amongst those with 10-249 employees, or with a minimal/low risk rating improved in Q4 to the highest levels seen to date, and was stable for smaller applicants and those with an average or worse than average risk rating.
- Levels of confidence remained in contrast to current success levels. Success rates for renewals Q3 2012 to Q4 2013 were 96%, compared to 56% confidence amongst those planning to renew a facility, while for new funds success rates were 48% against a confidence level of 29%.
