Finance brokers will play a key role to play in helping small and medium-sized enterprises (SMEs) recover from the impact of Covid-19, according to research from Aldermore.
With SMEs expecting to borrow billions in order to support their businesses following the Covid-19 outbreak, many SME business owners will likely turn to finance brokers to help them access the right funding. Prior to the pandemic, UK SMEs who used a broker were able to access an average of £93,000 per business.
Given the huge impact the pandemic has had on businesses, SMEs expect to borrow £48.3 billion to get themselves back on track following Covid-19 and broker support will be more important than ever to help SMEs access the right type of financing options, the survey found.
In the post lockdown era, business resources will likely become increasingly stretched and finding the right funding package could be vital for survival. 27% of SME decision makers who used a broker felt more supported and had access to a tailored process which was specific to their business’ needs.
33% of SME decision makers have used a broker in the past to access funding, and by using a broker, SMEs are more likely to use a diverse range of funding options, which include commercial mortgages (54%), start-up loans (52%) and Asset Finance (49%).
SMEs can reap several rewards by using a broker, with 28% stating their business was able to consider multiple options when applying for funding. Furthermore, 28% experienced an easy process and 27% felt more supported and had access to a tailored process which was specific to their business’ needs.
Since the start of the pandemic, brokers have continued to support SMEs, helping them access suitable finance options with products such as the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme (BBLS).
Word of mouth is key when it comes to SMEs choosing a suitable broker, with 20% relying on a personal recommendation from a friend. 19% of SMEs picked a broker based on their credentials and 17% chose based on their willingness to negotiate on fees and services.
Tim Boag (pictured), group managing director, business finance, at Aldermore, said: “Brokers are often the unsung heroes when it comes to SME finance. In the months ahead, they will be needed more than ever to help businesses secure the funding they need.
“Many SME owners are still relying on personal loans which can often be expensive and unsuitable. Understanding more about the finance options available means small businesses will be able to make more informed decisions about how to survive in the challenging months ahead.”