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March 31, 2021

Cashflow is key reason behind UK SMEs applying for finance: iwoca index

By Alejandro Gonzalez

Cashflow is the key motivation for SMEs applying for finance, according to an exclusive index of UK brokers by Europe’s leading small business lender iwoca

iwoca’s new SME Expert Index, which covers a four-week period in January, reveals that 41% of brokers said the most requested reason for applying for unsecured finance was to ‘manage day-to-day cash flows’. 

One in four brokers stated that to ‘grow the business’ was the most common purpose for a loan, whilst 20% suggested that bridging cash flow gaps was the key driver behind finance applications.

These results – to be published every second month by iwoca – suggest that small business owners are using finance for short-term means rather than long-term projects, and may reflect the wider uncertainty in the economy at the time as businesses look to shore up their finances rather than invest for growth.


Despite the application deadline for the Coronavirus Business Interruption Loan Scheme (CBILS) coming to a close, demand for the government-backed loan scheme remained relatively steady in January compared to the previous month; 57% of brokers said it was broadly the same.

One in five (18%) brokers submitted more applications for the scheme in January than in December, whilst one quarter reported that they had submitted fewer applications.

However, brokers suggest that demand for unsecured finance from small business owners rose slightly in January compared to December, with over one-third of respondents (36%) stating that they had submitted more applications to lenders compared to 18% who had submitted fewer.

Brokers found that those applying for CBILS were looking to borrow towards the lower end of the range available. The overwhelming majority – 92% – of applications made in January were for £250,000 or less, with two-third of submissions ranging between £150,001 and £250,000. This remained consistent with the previous month, with 66% of respondents noting that the average loan request was the same as December.

Speed is king

In the unsecured lending space, two-thirds of brokers said that ‘speed of receiving a decision’ was the factor which most often played a part in deciding which lender to send a submission to, ahead of whether the amount requested met the lender’s offering (56%). Incidentally, 26% of brokers sent more CBILS applications to non-bank lenders in January compared to December (13% sent fewer), which may reflect our findings of the importance of speed in the unsecured lending space.

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