Four in ten (40%) UK small and medium-sized businesses (SMEs) claim it is easier for them to access finance from fintech lenders rather than mainstream banks. The claim is made by alternative finance and payment solutions provider, Sonovate. It has released research noting that alternative finance options increasingly offer a lifeline for UK SMEs. Specifically, seven in ten (70%) admit they wouldn’t have survived the current cost of living crisis if it wasn’t for these types of lenders.

Two-thirds (65%) more SMEs are experiencing more difficulty in accessing finance from high-street banks than they were in 2022. Sonovate reports that traditional banks are pulling away from the market.

It also references data from UK Finance suggesting a reduced appetite amongst high street banks to lend to SMEs. Gross lending dropping to a post-pandemic low of £3.7bn in Q1 2023. This is less than half of the £7.6bn figure two years before. The figure dips slighting to £3.6bn in Q2, the latest quarter for which figures are available.

Fintechs increasingly disrupt SME lending

Richard Prime, Co-Founder & Co-CEO of Sonovate said: “Given reduced appetite amongst high-street banks, it’s no surprise that SMEs are turning to alternative finance options as they pursue growth plans and continue their post-pandemic recovery.

“Fintech lenders are successfully disrupting the incumbents due to a greater understanding of the specific funding needs of SMEs but also the ability to quickly offer on-demand funding solutions. This approach allows fintechs to offer quicker finance decisions than the established market players, empowering the UK’s innovative SMEs to concentrate on growth and generating revenue rather than seeking funding.”

Fintech lenders can also offer funding solutions to be embedded within an organisation’s platform. This allows finance to be obtained much more quickly. Invoice financing, borrowing against the value of an unpaid invoice, remains a popular finance option for SMEs. Over three quarters (77%) say these tools have improved business processes, such as cash flow management, and transactions.

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By GlobalData

Over half (51%) of SMEs say adopting fintech tools such as payroll or accounting tools would help them to become more efficient. 54% believe it would save time. Additionally, 47% of SMEs believe these fintech tools would provide enhanced insight into customers.

Sonovate: £4.2bn lent since 2014

Since it started funding in 2014, Sonovate has lent over £4.2bn to 3,300 businesses and 40,000 workers in 44 countries.

Sonovate recently announced a significant increase in its securitisation to £240m from the £165m announced last year with the strategic addition of Lloyds Bank to its group of finance providers. This deal expands Sonovate’s capabilities by enhancing the pool of the company’s lenders. It also bolsters its capacity to broaden its customer base and increase its funding to international companies while endorsing its position as a fintech industry leader.