The Bank of England (BoE) says that UK firms face their biggest lending squeeze since the financial crisis. The BOE survey found that British businesses are facing the biggest lending squeeze since the financial crisis amid rising uncertainty about the health of the economy. The survey showed that corporate default rates have been increasing over the past 2 years, whilst corporate credit availability has been diminishing for the past 18 months as companies’ demand for credit fell in Q3
In response to the survey, Rob Straathof, Liberis CEO, says it is unhelpful to suggest otherwise: “While the BoE’s projections are concerning, naturally they refer to Bank lending and should not be confused – neither are they representative – of the entire funding landscape,” he adds. “There are numerous responsible lending options from the alternative finance sector, designed specifically to support small business growth, an important part of the UK economy.”
Liberis’ research shows that businesses are however looking to banks as their first point of contact when looking for finance. Credit cards are another popular choice, but alternative finance providers rank lowest as a touchpoint in customers’ journeys.
The first Quarter of 2020 will see businesses, particularly in the retail, health and beauty and automotive sectors investing in new stock, according to Liberis Finance’s Quarterly Funding Trends report, while the second quarter will be about expanding business. In terms of the most common reason for accessing funding, after business expansion and new stock, staffing was the third most common reason.
The biggest spike in funding comes in Q3 in September, with businesses purchasing stock to ensure they are fully prepared for the Christmas period.
“Despite concerns over the impact a potential no-deal Brexit will have, the period obviously provides a critical sales period for retail businesses,” says Rob. “And It is encouraging to see so much of small business’ financing is ensuring that they have the right seasonal proposition.”
“Our analysis shows that it is not all about paying the tax man or keeping a business’ head above the water. In fact, our data shows that funding is about growth and forward planning –and it is our job as an industry to make sure alternative finance options are better known and understood.”