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Figures show that businesses are looking for more financing and demand for lending is set to increase in the next 12 months, with 89% of businesses interested in borrowing to cover overheads or refinance existing debt.
150 businesses with 10-100 employees were polled on the outlook for 2023. The survey results showed that more than two in five (43%) plan on borrowing to stay afloat, and just under a third (37%) are borrowing to refinance old debt.
The British Business Bank also found that while total debt held by SMEs has reached new highs, loan repayments are becoming a smaller percentage of business cashflows as those business turnarounds start to recover.
The report suggests a lack of information available to businesses about financial products is concerning, with 10% of respondents saying they needed more clarity about borrowing and 17% saying they wanted a greater selection of loan products to choose from.
Business loan defaults are also on the rise, with a growing number of businesses being over-leveraged and missing opportunities to support growth. Recessions often lead to an increase in business loan defaults, and the CBILS is currently seeing an 8% default rate. That’s £6 billion worth of debt, according to the government.
Chief product officer at Allica Bank, Conrad Ford, said: “It’s the responsibility of banks to give businesses the best chance of surviving and thriving through this economic recession by providing them with the knowledge they need.”
If you need to seek financial help for your business, email enquiries@maffinancegroup.co.uk, call 0115 958 6872 or fill in an enquiry form below.
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In the UK the financial year begins on the 6th of April of the current year and ends on the 5th of April of the following year.
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