As many as three in ten SME finance experts (28 per cent) report that the most requested loan amount at the start of 2024 exceeded £100,000, 56 per cent higher than the same period last year, according to new research by iwoca, the European small business lender.

In new research, Q1 2024 SME Expert Index, iwoca reveals that there are increasing signs of positivity in the UK lending market for small and medium-sized companies. iwoca conducted the research alongside SME finance brokers who collectively submitted over 2,500 loan applications over four weeks.

The lender found that 70 per cent of brokers are optimistic about SME prospects in 2024, while just eight per cent are pessimistic about their clients’ outlook for the year ahead.

Meanwhile, 37 per cent of Brokers said the number of applications for finance they submitted for SMEs had increased since the last quarter, as 49 per cent said the volume of applications had stayed the same. Forty-one per cent of brokers also reported that the primary purpose of the loans they are applying for is to help SMEs grow their business.

Colin Goldstein, commercial growth director of iwoca, commented: “The UK’s SME lending market is experiencing a resurgence. We’re seeing a significant rise in loan applications, with many businesses seeking larger sums to invest in growth.

“This coincides with low recession fears amongst SMEs – a positive sign that could point to a stronger year ahead for our economy and the small businesses underpinning it.”

Overall, 86 per cent of brokers predict that demand for finance from SMEs will grow in the next six months, the highest level seen over the last six quarters.

iwoca secures investment

To meet the increasing demand, iwoca has secured a new £270million package of debt funding, pushing its total investment over £1billion since 2012.

This includes £150 million in debt financing from Citibank and Insight Investment to support the company’s expansion in Germany, alongside an additional £120million from Barclays and Värde Partners for its UK operations.

As the UK officially came out of recession, fears of a future recession among the UK’s 5.5million small and medium-sized enterprises have fallen to their lowest level in almost two years. Forty per cent of brokers reported that the small and medium-sized companies they act for were still concerned about a recession, down from 77 per cent in Q2 2022.

Sally Chesterton, head of operations at Love Finance, commented: “We’re certainly seeing more optimism from small businesses this year, with customers increasingly citing growth as their reason for seeking finance. Falling recession concerns have definitely helped.”

While recession fears have receded, the data shows that concerns about inflation remain, with 38 per cent of brokers saying increasing business running costs are their main worry for the SME owners they work with.

Tehmina Mirza, business finance specialist at Connect Mortgages, commented: “High street lenders have their set criteria and are quite inflexible about them. They are picking and choosing the type of business they want to be in. I’m finding more businesses do not fit or meet these parameters, leading to a shift towards alternative lenders.”

Tide, the UK-based business financial platform, has partnered with Adyen, the global fintech platform, to offer small and medium-sized businesses (SMBs) in Germany Tide business accounts, with eyes on further expansion across Europe in the future

Tide originally announced its first foray into the European market, specifically through Germany, in March. Now the financial platform is fulfilling its promise by offering cost-effective and efficient business accounts to small businesses lacking a finance function.

Highly connected finance and admin solutions including invoicing and accounting are also set to follow later in the year. For Adyen, this is the first launch of its banking-as-a-service solution in Germany.

Oliver Prill, CEO at Tide, commented: “Our mission is to be the leading international financial platform for small businesses. As Tide grows in the UK, India, Germany and beyond, we are happy to be partnering with renowned payments provider Adyen. With Adyen, we are able to offer excellent banking-as-a-service solutions to our small business owners in Germany and beyond.”

Tide currently boasts a 10 per cent market share of SMBs in the UK and launched in India in December 2022. Its member base has grown to more than 800,000 small businesses across India and the UK.

Through the partnership with Adyen, Tide can fortify its customer-centric approach by leveraging Adyen’s full-stack banking-as-a-service offering, which includes inbound and outbound payments via the SEPA payments system.

Tide members in Germany will receive a German IBAN number when they open a business account from launch. This enables them to receive and spend money easily and with a local account reference. With German IBANs, Tide demonstrates its commitment to providing exceptional, localized payment experiences and solid understanding of small business needs.

Alexa von Bismarck, president EMEA at Adyen, also commented: “The addition of local IBANs in Germany exemplifies our commitment to building local offerings. We at Adyen listen carefully to our customers, and as a result know what their needs are, and respond by creating products to create trust and convenience for them in the market.”