SMEs’ funding requests highlight importance of prompt payments

SMEs seem to be undeterred by Brexit uncertainty as the National Association of Commercial Finance Brokers (NACFB) records a sudden increase in funding enquiries during August. While the numbers are encouraging, could they suggest that small businesses are opening themselves up to repayment problems further down the line?

Spike in finance enquiries reveals new-found confidence

According to the NACFB, its funding platform FindSMEfinance.co.uk has taken over £20 million worth of finance enquiries in August so far. This figure is double the amount received in August 2015 and the same as the total for the whole of July.

The Association’s numbers for this month, which also revealed that the average requested loan was £128,000 – considerably more than July’s £73,000 – suggest that SMEs aren’t as fazed by Brexit as first feared. NACFB’s Chief Executive, Adam Tyler, said that August is usually a quieter month, “but businesses aren’t procrastinating”.

“UK SMEs are the lifeblood of this country,” Mr Tyler added, “but if they’re going to take advantage of the opportunities presented post-Brexit, the alternative funding sector has a vital role to play, particularly as we look to broker new trade agreements with countries outside the EU.”

‘Caution’ about how SME’s receive funding

While Mr Tyler was upbeat about the figures, he did highlight the importance of how SMEs receive their desired funding. “There is some caution out there about who is lent to,” Tyler explained, “but there are more lenders than there’s ever been in the commercial finance sector who are happy to provide finance.”

SMEs may have a number of funding routes to consider, but it’s vital that loans are secured on terms they can abide by. Further, smaller firms should be cautious about being swept up by the current wave of positivity and applying for finance that they might not actually need.

A knock-on effect of this was recently highlighted by trade body R3: Association of Business Recovery Professionals, when it revealed that late payments were a major reason behind almost a quarter of UK insolvencies in the past year. If SMEs are affected by overdue invoices, then they may be unable to meet their loan repayments.

If you’re the owner of a small firm that’s struggling with late payments, get in touch with Dukes Bailiffs to find out how our ethical debt recovery services can improve your organisation’s liquidity.