Understanding the SME mindset
In 2017, the number of business owners turning to their primary bank for a loan declined 14%. Scottish Pacific CEO, Peter Langham, explains why brokers are uniquely positioned to capitalise
The latest SM Growth Index by Scottish Pacific paints a clear picture of SME owners, their pain points, and their funding needs and intentions. For brokers, these results can help them understand the SME mindset and why it is important to offer a range of suitable funding options, which allow both clients and their brokers to grow.
Just over half the businesses polled expect revenue to grow in 2018, and two thirds reported improved cash flow for 2017. Those that are growing are growing strongly; however, growth businesses are more likely to be frustrated about cash flow.
Supporting the positive outlook, SMEs are open to different ways of funding their growth. Increasingly, they are looking away from the banks to more flexible alternative funding options.
More than one in five SMEs – a total of 22% – opted for non-bank alternatives to funding their growth. A further 24% looked to borrow from their main relationship bank, and this bank lending percentage has trended down from 38% in our initial 2014 Index.
The most popular funding choices for SMEs using alternative working capital options in 2017 were debtor finance, which was used by 77%; merchant cash advances, used by 23%; P2P lending, with a total share of 10%; and crowdfunding, utilised by 9%.
