Commercial finance brokers played a crucial role in securing £38 billion in lending to small and medium-sized enterprises (SMEs) throughout 2023, according to the latest findings from the National Association of Commercial Finance Brokers (NACFB) membership survey.

While total lending to SMEs experienced a 16% decline from the record-high of £45 billion in 2022, brokers navigated uncertain economic conditions and decreased lending appetites. More than half (52%) of surveyed brokers observed a reduction in lending appetites across all lender types. Notably, nearly three-quarters (72%) of brokers anticipate an upswing in the use of alternative lenders in 2024.

Drawing insights from over 2,400 commercial brokers and 155 lenders within the NACFB community, the survey revealed an average loan size of £509,000 in 2023, reflecting a 10% decrease from the previous year.

The survey underscored the role of brokers, as 32% of small businesses successfully funded in 2023 had previously faced capital refusals elsewhere, marking a notable 10% increase in such successes year-on-year.

Paul Goodman, Chair of the NACFB, said: “The ability of NACFB Members to turn a ‘no’ into a ‘yes’ has never been more crucial. With a third of SMEs successfully funded in 2023 having been already declined funding elsewhere, our Members have directly contributed to the sustainability and growth of the UK’s SME sector.

“Commercial finance brokers should no longer be the ‘best kept secret’ of business borrowers. With banks and lenders reducing their presence on Britain’s high streets, there emerges a significant opportunity for SMEs to fully utilise the knowledge, guidance, and support of brokers, as they affirm their position as the modern-day bank managers,” Goodman added.

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Key findings from the NACFB’s 2023 membership survey include:

Borrowing factors

  • Growth ambitions drove 87% of SME borrowing in 2023, indicating that a robust entrepreneurial spirit remains despite the challenging economic backdrop.
  • 32% of new clients successfully funded by Members had been previously declined funding elsewhere, underscoring the pivotal role of NACFB Members in facilitating access to essential capital.
  • 89% of surveyed commercial finance brokers reported that inflation had caused either moderate or significant concern among their clients.
  • Three-quarters (73%) of the total transaction value generated by NACFB Members originated from property-related sectors.

Lending conditions

  • 69% of total lending from commercial lenders was conducted via their broker channels in 2023, with a majority of lenders expanding their broker-facing teams during this time.  
  • A significant 61% of surveyed commercial lenders reported increased collaboration with brokers in 2023 as a direct response to economic challenges.
  • In 2023, 52% of NACFB Members observed a decrease in lending appetites across all lender types.
  • 43% of commercial lenders reported that the elevated interest rates had directly led to a decrease in their total completions in 2023.
  • 70% of broker-led transactions were placed with either specialist lenders or challenger banks, whilst a quarter of broker respondents shared that their relationships with high-street banks had worsened in 2023.
  • 35% of commercial lenders surveyed admitted they lack a formal referral system for direct loan enquiries that they subsequently declined.
  • 98% of surveyed commercial lenders expected their relationships with brokers to either strengthen or at the very least remain consistent in 2024.
  • Both brokers and lenders viewed a continuing high-rate environment as the biggest threat to their business.

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