We’re continuing our look at the outcomes from the recent SME Finance Monitor Report for the first quarter of 2015.
The SME Finance Monitor Report is a quarterly survey carried out by an independent body tasked with researching the relationship between small businesses and how they finance themselves.

Previously we looked at what the real demand for finance is (‘What’s The Real Demand for Business Finance?’) and now we’re looking at what the outcome is for those businesses that did apply for finance from their bank.

First of all of those businesses thinking of applying for finance what was their level of confidence in getting a yes? The survey found that amongst those planning to apply, 49% were confident that their bank would agree to their request.

Let’s look at those businesses that said they had applied for finance and what actually happened.

In the 12 months to quarter 1 2015 18% of the businesses surveyed said that they had what’s referred as a ‘borrowing event’ whether that’s a new finance request or a renewal of an existing facility.

So what was the outcome?

The SME Finance Monitor team stretched it back further by looking at the previous 18 months and the success rate for new and renewed facilities was that 76% got what they wanted.

Is that a bit higher than perhaps you thought?

And that 76% was an increase on the 66% success rate reported 12 months previously… so the success rate is on the way up.

Let’s strip out those looking just to renew existing facilities – there the success rate was 98% got their renewal agreed.

What about those applying for new money being those that have borrowed in the past. That success rate is slightly lower at 65% but it is up from 46% a year ago… so again more progress with more businesses getting what they wanted.

For those applying for money for the very first time then the success rate is slightly lower at 55% but this has improved from the 37% seen in the 18 months to quarter 4 2013.

Remember at the start I said that 49% of businesses said they expected to get a ‘yes’ from their bank but as we have seen, the actual success rate is much higher.

It’s in closing this ‘confidence gap’ where our focus should be… getting businesses to realise that their chances of success in getting finance is actually higher than they may believe.

Growth typically needs finance so don’t hold back your growth by assuming you’ll get nothing and so you don’t ask… bad move!

Prepare your Business Plan, get your financial information up to date and start applying!

If you want to chat through your finance options then just book a call with one of the Business Loan Services team.

As we know access to finance amongst businesses has been tough and over the last few years the media has been filled with horror stories… but what is the reality on the ground?

Since mid 2011 an external body, the SME Finance Monitor team, has been carrying out quarterly independent research in to dealings between banks and small businesses when it comes to raising finance. Over the years the SME Finance Monitor Report has provided insight into what is really going on.

And the team has now released its latest report for quarter 1 2015.

So what are the key findings?

First the good news… 79% of those surveyed said they are now operating profitably.

This is up from 69% in the same quarter of 2013 – a significant improvement.

What about use of external sources of finance?

In quarter 1 of 2015 36% of businesses said they used external sources of finance.. that leaves a large number which are self-financing

Of those businesses using external finance 29% are using ‘core finance’ products such as overdrafts, loans and credit cards. This is down from 40% in the first quarter of 2012. This shows how businesses are moving away from the traditional sources of finance.

We often hear the statement that businesses are being starved of credit… well here’s the killer statistic which consistently comes out of this survey.

In the first quarter of 2015 48% of SMEs define themselves as ‘permanent non-borrowers’… they are not interested in borrowing and haven’t done so over the five years and don’t intend to in the future.

This was 30% in quarter 1 2012 so an increasing number of businesses are opting out of borrowing.
But what about business’ appetite to borrow over a shorter term?

The SME Finance Monitor team ask businesses about borrowing over the previous 12 months and looking ahead.

Here, 79% of businesses put themselves in this category – referred to as ‘Happy non-seekers of finance’

That’s nearly 80% of those surveyed saying they don’t want to borrow!

Added to that 72% of businesses said that their aim is to pay down their debt… and not borrow again.

So perhaps all the fuss about helping businesses to borrow is not as a big a problem as we think.

I’ll be returning to sharing more findings from the latest SME Finance Monitor Report so watch out for a future video.

In the latest Business Finance Bulletin episode Business Loan Services’ Rob Warlow looks at highlights from the most recent SME Finance Monitor Report which reveals a number of interesting findings on how businesses are dealing with the issue of raising finance.

In a report from Hitachi Capital Rob looks at how business confidence is on the rise with more businesses looking forward to growth.

Relative newcomer to the banking market Metro Bank is looking to shake up the Invoice Discounting industry with changes announced to its service.

In the Business Finance Tip of the Week Rob chats with Nick Rowe from PricewaterhouseCoopers in which he shares their thoughts on the four levers of growth which small businesses need to be mindful of when planning ahead.

You can listen to this week’s edition as a podcast. To download to your phone, PC click below via our SoundCloud page or go to our itunes channel and subscribe.

In the latest Business Finance Bulletin Rob Warlow discusses findings from the latest SME Finance Monitor report on small businesses appetite to borrow. Is it as strong as we think?

One industry sector that does struggle to raise finance is the UK house building trade. Rob shares news of a new fund Santander is putting together to help house builders who need development finance.

During the financial crisis short term business loans have become popular and Rob looks at the news of the takeover by EzBob of Everline. With both companies having lent a combined £54 million the short term business loan industry is set to grow further.

Following a workshop held by Aldermore Bank on Invoice Discounting Rob had a chance to catch up with Richard Whitehouse, Regional Sales Director to hear more about how invoice discounting can help unlock cash to fuel growth.

If you prefer to listen to this edition as a podcast click below or to download it to your phone click the download button.

In the latest Business Finance Bulletin Rob Warlow looks the Chancellor’s Autumn Statement with the announcement of the extension of the Funding for Lending Scheme, and additional support for the Enterprise Capital Fund and Enterprise Finance Guarantee Scheme.

Late payment continues to feature on the agenda with news that the government is launching a consultation paper aimed at improving transparency amongst large businesses on their payment practices.

The recent SME Finance Monitor Report reveals interest insights in to the experience small business owners are having with their banks in terms of getting a finance approval. Rob looks at the numbers which shows why you shuld not assume your bank is going to say no if you approach them for business finance.

Agreeing the sharing of property security between different banks has always been a slow process but Rob discusses new arrangements put in place by the four High Street banks to speed up the process.

The Business Finance Tip this week comes from an interview Rob did with negotiation expert Derek Arden. In the interview Derek gives three tips on how to negotiate a better deal with your bank.

You can also listen to this week’s Bulletin as a podcast and you can download it to your PC or phone via our SoundCloud page. Click on the download button below or simply click to listen now.

In the latest Business Finance Bulletin Rob Warlow looks at the forthcoming launch of country-wide Venture Funding Hubs which will provide free advice to businesses wanting to know more about crowdfunding and how it works.

Turning to conventional sources of funding Rob looks at the latest bank lending figures which perhaps not surprisingly show a further fall in the total amount outstanding to UK businesses. However, there is a glimmer of some good news.

What banks are looking for in a finance request is the subject of a recent review, The State of Business Finance, carried out by the Association of Chartered Certified Accountants and Rob shares the one message this report has for banks.

Whether businesses actually want to borrow is a topic that is rarely looked at but as Rob discusses there is a large section of the UK business market that have no interest in borrowing. In a clip from a live seminar Rob looks at the key reasons why business owners say they are not interested in looking for finance.

If you prefer to listen to this week’s Bulletin you can download it as a podcast via our Soundcloud page. To listen now click below or click the download image to save to your PC or phone.

In the latest Business Finance Bulletin Rob Warlow reviews findings from the recent SME Finance Monitor Report which reveals that demand for finance amongst business owner is low. But what does that do for growth?

According to another survey Rob discusses how many businesses are planning to invest this year but that they have a low understanding of how alternative finance works and how it could benefit them.

If you are looking to raise equity then news of a support program run by Crowdcube to help you through the process.

In the Business Finance Tip of the Week, a clip from a live seminar in which Rob explains how your financial information needs to be kept up to date.

You can access this Bulletin in two ways… watch the video on our You Tube Channel or listen and download the Bulletin to your phone via SoundCloud

The latest SME Finance Monitor Report shows how much the funding and finance landscape is changing with small businesses demonstrating cautiousness and a reluctance to engage in seeking out finance.

One of the key findings from the latest quarterly report, which surveys 5,000 UK small business owners, is that issues around access to finance is now slipping off the list of obstacles to running to a business.

The current economic climate continues to be cited as the main obstacle to running the business in the next 12 months with 17% of SMEs quoting this as the main barrier. In terms of access to finance only 8% claimed it to be an issue (compared to 12% in Q1 2013), which appears to be counter to how much press the relationship between banks and small businesses is given.

Interestingly 65% of those surveyed said they see no major obstacles which could hold them back from going for growth. This is an encouraging sign.

With access of finance being seen as less of an issue than we may think, how does this translate in to actually usage of finance?

The report found that 39% of SMEs were using external finance in the second quarter of 2014, which is in line with most quarters since 2012. This means that 60% of SMEs either fund their business via shareholders/directors or don’t borrow.

In fact 39% classified themselves as a ‘Permanent non-borrower’. These are businesses which have not borrowed over the last five years and have no intention of borrowing over the next three months. The number of small businesses who declare themselves as not interested in borrowing has increased steadily over time, having been 34% in 2011 and 2012.

Even the number of businesses which have not borrowed over the last twelve months is remarkably low. Referred to as ‘Happy non-seekers’ these amount to 78% of those surveyed. So nearly 80% of SMEs are quite comfortable in not borrowing at all. This number is also on an upward trend having increased from 66% in Q2 2012.

You do begin to wonder why so much attention is given to the issue of access to finance when so many businesses declare themselves as not interested! But this does have one implication and that is as to how future growth will be funded. Growth typically needs cash to support working capital and investment needs so it is important for businesses to realise that growth usually needs finance and not to shy away from seeking it out.

Of those who do borrow, the range of finance products they use is also beginning to change. The report found that 30% of SMEs used ‘core’ products (loans, overdrafts and/or credit cards), but this is a declining proportion over time (it was 36% in Q2 2012). Other forms of finance, such as leasing, invoice discounting, private loans and crowdfunding, are being used by 17% of businesses so there is a lot of scope for alternative lenders to grow.

It’s clear that many businesses are comfortable where they are but for them to grow a finance need will kick in and it’s vital they don’t fall into the trap of going for growth with no cash… that can only end in disaster. But there is also a need for all finance providers to ensure that funds are there when needed and sending a clear signal that they are ‘open for business’. We don’t want businesses assuming they will get a ‘no’ and not even approaching a bank in the first place.

We will continue our look in to the findings of the latest SME Finance Monitor Report in future blogs.

In the latest Business Finance Bulletin Rob Warlow takes a look at findings from the SME Finance Monitor which gives an interesting insight into how small businesses are financing themselves. News from the European Central Bank (ECB) on negative interest rates… so how does that work?

And a look at how alternative lender Shawbrook have moved into profit for the first time which is a sign of a maturing of the alternative finance market.

In the Tip of the Week, a clip taken from a Kevin Green Business and Property Training event, Rob shares one question banks ask of themselves when reviewing a business finance request.

Posted on 13.12.2013, by Rob Warlow

In the latest Business Finance Bulletin Rob Warlow looks at the highlights from the SME Finance Monitor report particularly focusing on business demand for finance.

Rob also looks at why a bank would want to convert your overdraft to a loan and the importance of tackling the issue of succession planning when approaching a bank for business finance.

Enjoy this weeks episode!