Commercial finance brokers facilitate £38bn in lending in 2023

32% of SMEs successfully funded in 2023 had been declined funding elsewhere, highlighting the essential role of brokers.

Related topics:  Commercial
Rozi Jones | Editor, Financial Reporter
21st February 2024
man in business suit with calculator surrounded by graphs and paperwork
"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"
- Paul Goodman, chair of the NACFB

Commercial finance brokers facilitated £38 billion in lending to SMEs in 2023, according to the latest membership survey findings from the National Association of Commercial Finance Brokers (NACFB).

Total lending to SMEs fell by 16% from 2022’s all-time high of £45 billion in what, according to commercial finance brokers, was a year marked by uncertain economic conditions and lower lending appetites. Over half (52%) of surveyed brokers observed a decrease in lending appetites across all lender types, with nearly three-quarters (72%) of broker respondents anticipating an increase in the use of alternative lenders in 2024.

43% of commercial lenders reported that the elevated interest rates had directly led to a decrease in their total completions in 2023.

The survey, drawing from the experiences of over 2,400 commercial brokers and 155 lenders, unveils an average loan size of £509,000 in 2023, adjusting to a 10% fall from the previous year.

Importantly, it also highlights the critical role of brokers, with 32% of small businesses successfully funded in 2023 having previously been refused elsewhere, marking a significant 10% increase year-on-year.

Borrowing factors

Growth ambitions drove 87% of SME borrowing in 2023, indicating that a robust entrepreneurial spirit remains despite the challenging economic backdrop.

However, 89% of surveyed commercial finance brokers reported that inflation had caused either moderate or significant concern among their clients.

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. 61% of surveyed commercial lenders reported increased collaboration with brokers in 2023 as a direct response to economic challenges and 98% expected their relationships with brokers to either strengthen or at the very least remain consistent in 2024.

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.

Both brokers and lenders viewed a continuing high-rate environment as the biggest threat to their business.

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.”

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