Zoe Short

Brokers can be the lighthouse for SMEs amid the Brexit fog

It’s now pretty clear that the pressures caused by political uncertainty are materially impacting UK SMEs when it comes to securing traditional high street bank finance.

SMEs hunting for finance options to support their growth amid the Brexit fog are finding it a challenging and frustrating task — if they stick to conventional funding routes, at least.

More evidence of this emerged last week in the latest quarterly inflation report, which showed business investment had fallen by more than 2% over the past quarter. 

In the post-inflation report press conference, Mark Carney, governor at the Bank of England, said: “The latest business investment intentions surveys point to further declines over the next few quarters, which would mark the longest run of falling investment in the post-war era.”

In short, as the Brexit drama plays out, the number of high street banks choosing to steer clear of SMEs is in the ascendancy. But thankfully, this is 2019 and not 2009.

Unlike during the credit crunch, in 2019 the inactivity of the banks is opening the door to the ever-growing ranks of alternative, non-bank lenders and the marketplaces they operate in — and it’s in connecting businesses with these sources of funding that commercial brokers have an increasingly important role to play.

The good news is that, in many cases, the new generation of non-bank and alternative lenders are more agile, competitively priced and commercially minded. They’re also offering products that would leave risk departments on the high street scratching their heads.

For example, one institutional lender we work with is offering unsecured loans of up to £5m — and not a warranty or personal guarantee in sight. It’s groundbreaking stuff and the underwriting and due diligence are bespoke rather than reliant on box ticking.

But most importantly, these new forms of finance are really needed. While no one can deny that Brexit continues to cast a shadow over the economy, in our experience there are a lot of firms out there right now that are embracing this uncertainty and see it as an opportunity to expand and grow their market share.  

Against this backdrop, it’s brokers that can help ensure SMEs secure the right finance they need at the right price and from the correct sources. Whatever an SME’s funding requirements, they can be the lighthouse in the Brexit fog.

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