SMEs are breathing a bit easier, but the price tag is still a sore spot
Last quarter’s iwoca SME Expert Index says that worries about a looming recession have slipped down by a solid 32 % from the highs of Q4 2022. That’s good news for shopkeepers, day‑to‑day managers, and freelancers who felt the dread of “what if” hovering over their little businesses.
Recession chill? Less of a chill now
- Only 49 % of finance brokers say their clients are still thinking about a recession.
- That’s a drop from the 73 % claim in Q4 2022—so hopes are finally starting to grow.
Inflation is still the main shelf‑saver in the bag
Even though the recession gloom is easing, inflation remains the headline worry: 45 % of brokers report that “inflation is the biggest concern” for SMEs heading into 2024.
- That’s up from just 32 % in Q4 2022.
- The numbers tell the same story—a business owner’s wallet is still on the edge, hoping for a quiet market to keep prices from spiking.
All in all, the road for SMEs is looking a bit smoother for recession fears—but they’ll need to keep their eyes on the cost of coffee and the price of coffee beans.
Demand for larger loans climbing
SMEs are Reaching for the Big Bucks in the UK
Loan Dynamics Shift from Small to Large
It looks like the UK’s small businesses are switching gears. 26% of SMEs finance experts report that more than a quarter of their clients are now chasing loans above £100,000—up from just 15% two weeks ago. That’s a clear sign that entrepreneurs are aiming higher and dreaming bigger.
Meanwhile, the demand for tiny loans is taking a nosedive. It’s as if startups are ditching the “tiny‑cash‑flow” busy‑work for more long‑term funding. The shift suggests that businesses are prioritising growth over day‑to‑day cash flow relief.
- In the fourth quarter, only 40% of brokers thought loans up to £50,000 were the go‑to choice—a drop of 8 percentage points from the previous quarter.
- Large loans (over £100,000) grew from 15% to 26% in a single quarter.
- Smaller loans (<£50,000) see reduced demand as companies eye longer‑term expansion.
Bottom line: the pulse of UK SMEs is all about “why not aim big?” It’s like a play-by-play on the next big leap—just make sure you’ve got the bank backing it up.
Alternative lenders pick up the slack
SME Funding: Banks Are Tight‑Cuffing Small Businesses
Long‑time lenders are pulling back on small‑business loans, with 77% of brokers saying the high street’s appetite is down. Instead, 71% of those same brokers are turning to alternative lenders for most of their clients.
Why the Shift?
“The market finally bounced back after the gloom of 2023,” says Dan Guest, Director & Asset Finance Specialist at TAFCO Ltd. He notes that SMEs are now booming in confidence, asking for bigger loans—above £75,000—to straighten out higher‑rate debt and shrink loan terms thanks to an uptick in new orders.
Guest adds that rates are falling across the board, both for unsecured and secured Hire Purchase debt, making larger loans more attractive. “Our play is to tap specialist lenders outside the high street,” he explains. “High street banks are getting picky, but the rest of the market is far easier to navigate for most businesses.”
Goldstein’s Take on UK Small Business Outlook
- Optimistic still. Colin Goldstein, Commercial Growth Director at iwoca, says UK small business owners stay upbeat despite a lonely punting on inflation by the Bank of England.
- Loans are growing. Applications for larger loans are climbing and inflation is trimming itself—an omen of brighter days ahead.
- Challenges remain. Big‑bank reluctance to lend is still a thorn. Stability and unwavering support are crucial if SMEs wish to turn hopes into real growth.
What to Do Next?
For those looking to steer their business toward a future of growth and debt consolidation—consider the alternative finance web. Keep an eye on rate trends and the bold steps lenders like TAFCO and iwoca are taking.
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