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Funding Xchange full year lending review highlights Brexit impact

Funding Xchange’s full year lending review highlights Brexit impact

Funding Xchange has conducted a year-end review of lending to small businesses, based on data from over 30,000 small businesses seeking finance from over 40 lenders. The review points to the impact of the prolonged uncertainty of Brexit. The common theme throughout the data is the sense of caution shown by both small businesses and lenders, particularly from the period when it seemed clear that the Withdrawal Agreement would fail to pass through Parliament.

Funding Xchange is the main Government appointed online platform for businesses to apply for funding from a range of non-mainstream lenders, should they be declined by their high street bank. They have seen a tripling in value of funded deals in 2019 compared to 2018, and this reflects the continued need of businesses to access non-bank finance solutions as high street banks are not in the position to provide the funding needed by many businesses. The credit profile of these customers who were declined by banks has improved in 2019 – indicating that the increased uncertainty had an impact on the risk appetite of some banks.

“Whilst there may be a small lag in the approvals data in Q4, with some applications still going through the system at the year end,’ explained Katrin Herrling, CEO of Funding Xchange, ‘there is a very clear trend established that both borrowers and lenders have been repeatedly holding their breath as Westminster discussions to manage an orderly Brexit grounded to a halt. It is not surprising that growth-related funding was not a major theme in 2019.’

Key factors that are highlighted in the Funding Xchange data are:

- High street banks have become more cautious with their credit policies

- Construction, Retail and Property have been particularly hit by the apparent concentration concerns and flight to quality by the mainstream lenders

- In the last 2 months of the year there has been a shift towards more sole traders and start-ups seeking smaller loans and overdrafts. These customer segments have suffered the most from the reduced credit-appetite of lenders in 2019 and are increasingly finding it difficult to be funded.

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This article was published in Cambridge Network 31st December 2019