New iwoca index identifies cash flow as key reason for SMEs applying for finance


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New iwoca index identifies cash flow as key reason for SMEs applying for finance

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  • Our inaugural index reveals that over two in five brokers cite SMEs’ need to manage day-to-day cash flow as the main reason for submitting unsecured finance applications
  • The index finds that the volume and value of applications for the Coronavirus Business Interruption Loan Scheme remained stable in January despite the scheme nearing its end
  • Lenders’ speed of decision-making highlighted as the key factor in deciding where brokers submit finance applications
  • The SME Expert index will provide regular snapshots of the lending market from the perspective of industry experts

Cash flow is the key motivation for SMEs applying for finance, according to an exclusive index of UK brokers

Our 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 - which we'll publish every second month  - 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.

Applications for covid-finance stable as small business owners entered the new year

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.

Little change in the value of CBILS applications

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 for brokers

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.

To view the index results, click the button below. Or read on for some comments on the results from brokers themselves.


smallQuoteDuring a period of such great uncertainty, cash and cash flow are the most important factors in the success of any small business.

Norman Ramsay, Director of Endeavour Business Finance Ltd said: “Speed is king for brokers and of course for our small business customers. If we can secure a speedy loan for our clients then it usually means the application was easy to process and the systems were pretty slick. These things all really matter, especially when you compare to what the big banks are offering.

“I’ve had a number of conversations over the past few months which have revealed to me the disappointment of some business owners after they were rejected for a CBILS loan by their bank after a month of waiting and supplying information. Alternative lenders have certainly made their mark with regards to supporting those who have been let down by their banks despite years of trading and loyalty.”

Nick Mayhew, Director, Peak Business Finance said: “During a period of such great uncertainty, cash and cash flow are the most important factors in the success of any small business. Small business owners are under cash-flow pressure at the best of times, often due to long payment terms and late payments. Businesses and brokers place an enormous amount of value on speed, as the sooner the cash-flow issues are solved, the sooner the owners can get back to focusing on longer term projects and growth.”

Christoph Rieche, CEO and co-founder, iwoca added: “Brokers play a crucial role in guiding small businesses looking to take on finance, and this new index will provide a unique perspective of the small business lending landscape. Our aim is to be able to better identify small business’ appetite for finance, and how lenders can provide the right support to help them grow.”

Blog Content Block Image | Christoph Rieche

Our CEO and co-founder, Christoph Rieche

Index will provide new perspective on SME lending

This new SME Expert Index from iwoca will provide invaluable insight from brokers about the SME lending market, and will focus on the trends seen in the types and value of finance being accessed. The findings will also provide a snapshot on what is driving small business owners to borrow, and how these patterns will change as the country emerges from the pandemic. iwoca will be publishing this index every second month to take the pulse and capture the experience of brokers working with small businesses.

The index is taken from a survey carried out with 139 individual brokers serving thousands of SMEs across the UK between 4th January and 5th February 2021.


Charlotte was a UK PR Manager at iwoca. She's been sharing news and insights about the finance industry for over four years.

Article updated on:
July 12, 2021

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