Borro has warned that the banking industry must improve speed of access to finance for business owners, or risk a continued slowdown in business investment.
The short term lender issued its warning after the ONS released its quarterly GDP data.
According to the preliminary data, UK gross domestic product (GDP) was estimated to have increased by 0.3% in Quarter 1 (Jan to Mar) 2017, the slowest rate of growth since Quarter 1 2016. Retailers, hotels and restaurants all suffered falling growth after being forced to hike prices due to higher input costs (due to a fall in sterling after the EU referendum).
Paul Aitken, CEO of Borro, believes business owners are missing out on growth due to the slow pace of lending.
He said: “Bank lending speeds have remained static despite improvements in technology, consumer credit checks and a steadier market. If the industry is serious about supporting business growth in the UK, it’s critical lending speeds are improved. We know business owners are missing out on opportunities to expand purely due to lack of available cash.”
Recent data has shown that 19% of UK SMEs have missed at least one new business opportunity in the past 12 months due to a lack of available finance, resulting in an average cost of £77,651 per business.
Data from Experian also highlights that 30% of business owners state speed as a direct reason for looking at alternative finance as opposed to mainstream lenders in 2016, up from 6% in 2015.
Aitken added: “The average bridging completion time in the UK is 48 days, whereas we can provide loans against property in three days, some within 24 hours. There’s no reason the banking industry can’t improve its valuation methods to offer a better service for its customers, especially business owners in need of a quick turnaround so investment decisions can be made.”
Borro forecasts a 30% growth for 2017 as asset based finance increasingly takes market share from bank overdrafts as a key source of funding for SMEs.