Lowering thresholds, raising performance: how lenders can reach SME borrowers more sustainably

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If BDO UK’s research on the pressures facing small businesses is anything to go by, it’s clear that company owners are steeling themselves for a tough year. 

In a recent survey by the business tax, accounting and advisory specialist, rising energy costs, it emerged that inflation and the cost of living crisis represent the greatest threat to 65% of firms.   

Alongside this, the Federation of Small Businesses (FSB) has warned that the UK faces a “lost generation of businesses” amid forecasts that 53% of companies expect to stagnate, shrink or cease trading over the next 12 months. 

How this will affect cash flow or capital investment remains to be seen but it’s likely that SMEs will need financial support as we navigate choppy economic waters ahead.

But that comes with challenges too.

Earlier this year, the FSB’s Small Business Index revealed that firms’ confidence in accessing finance had hit rock bottom, with fewer than a fifth of companies describing the availability of credit as good.

What can be done, then? Well, there are all sorts of considerations when applying for funding. For example, venture capital typically requires dilution of ownership, something many leaders might not want to do. 

Meanwhile, bank debt is often only offered in amounts larger than lots of SMEs wish to borrow.

This all points to a need to test alternative approaches and explore how modern cloud-based data engines might improve both lending decision making and outcomes for would-be borrowers. 

The objective has to be delivering new funding opportunities for small businesses while making it viable for lenders.

To help explain how data-driven B2B lending works, we’ve produced an insightful new white paper, Lowering thresholds, raising performance: how lenders can reach SME borrowers more sustainably.

In the document, we discuss the tools that work with popular accounting and ERP platforms to provide lenders with the information they need to make quick and intelligent decisions. 

It also works for trade credit insurance providers, who want to understand a business’s up-to-date financial position and reduce fraud risks to meet compliance obligations.

Elsewhere in the paper, we explain the barriers SMEs face when accessing finance, in addition to discussing Finecta’s unique approach to improving experiences for both lenders and borrowers – part of which involves enabling seamless and convenient finance applications and automated loan repayments from within accounting platforms. 

Crucially, we make a set of recommendations for the finance landscape, aimed at improving access to funds for the businesses that make up 99% of the UK economy. 

To find out what they are, download Lowering thresholds, raising performance: how lenders can reach SME borrowers more sustainably here.

In the coming weeks, we’ll take a deeper dive into some of the key points made in the white paper. Watch this space for further helpful content.

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