small business loans

A third of small and medium-sized enterprises (SMEs) who sought access to finance were rejected last year.

Smart payments platform Yolt has found that SMEs lost an estimated £3.7bn in potential funding over the course of 2021.

The average SME sought to borrow £331,275 in financing to help grow their business, however, on average, small businesses only managed to borrow approximately £50,000 less than this.

Leaders of small businesses which were denied funding cited the age of their business (31 per cent), the levels of existing business debt (22 per cent) and the lack of sufficient collateral (20 per cent) as factors in the decision.

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Medium-sized businesses (50-250 employees) were the most likely to be refused for funding (56 per cent).

Even among the successful candidates, only one in five SMEs described the process of borrowing as easy, and less than 10 per cent felt the process was low effort or made effective use of technology.

Small business leaders said that they are very open to using technology to refine the borrowing process, with two-thirds (66 per cent) willing to securely share their bank account data to improve their chances of borrowing money.

This follows previous Yolt research which found that the sharing of data via open banking technology could significantly increase approvals and reduce the processing time of SME borrowing by 85 per cent, benefitting both the lender and recipient.

“SMEs represent the foundation for a thriving economy, in the UK they represent 99 per cent of all private sector businesses; as such, it’s important we nurture SME growth,” said Nicolas Weng Kan, chief executive at Yolt.

“Traditional borrowing, limited as it is, can make access to finance difficult. This can impede growth and make it hard for small businesses to achieve their true potential.

“We can see a clear desire from small business leaders in our research to use the power of their data and insight to allow for more accurate decisioning when it comes to borrowing money; open banking is the solution to this.

“By employing open banking technology, lenders can get a clearer picture of a business’ behaviours and can then provide financing with far more confidence: it’s not about taking on extra risk but accessing a great level of insight.

“This technology also makes the application process quicker and automated, allowing for efficiencies on both sides.”

By Michael Lloyd

Source: p2p Finance News

The last two years have been an exercise in uncertainty as the global pandemic has transformed how we work, interact and how we buy goods and services. Perhaps no sector has been more under pressure than small business.

In a 2021 Visa survey, more than half (54 per cent) of global small and microbusinesses (SMBs) reported that the last year has been a challenge for their business – and that they’re still recovering.

But as the pandemic wears on, trends are emerging as behaviours begin to stick. That is certainly true for consumer behaviour, and we’ve seen that small businesses that embraced digital commerce have weathered the pandemic better. It’s no longer just about pivoting and surviving – there’s a hopeful surge in entrepreneurship, with a new breed of business owner coming online as digitally-native for the first time.

As the network working for everyone, Visa has made a multi-year commitment to digitally enable 50 million small businesses worldwide. We know that with the right tools, small businesses can confidently meet new customer expectations.

So how can these companies get an edge in a year ahead? Following are five of the important trends that will have an impact on the world of small and medium sized businesses in 2022.

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Now more than ever, experience will be key

Covid-19 fundamentally changed retail – redefining the boundaries between online and in-store shopping and opening up a world of omnichannel commerce. Considering that the average UK consumer is connected to over nine devices and almost five social platforms, SMBs need to rise to the challenge of engaging customers across all platforms.

The small businesses that come out on top in 2022 will be the ones that prioritise experience. Small businesses can no longer afford to think about consumers in unique buckets: people who shop online, people who shop in-store, people who shop in an app. The truth is that customers exist across all of these channels, so businesses need to be prepared to offer a fluid, omnichannel payments experience – one that is engaging, one that is safe and one that is simple.

Sustainability and social impact aren’t just for global brands anymore

The pandemic was predicted to slow the momentum behind environmental consciousness among consumers, but the opposite is happening. Deloitte has found that one in three UK consumers plan to purchase from brands with strong sustainable (34 per cent) and ethical (30 per cent) credentials going forward.

Gen Z and millennials in particular will continue to gravitate toward artisanal goods that are ethically and sustainably sourced, as well as sustainably produced food and beverages. In many ways, small businesses are ideally suited to cater to the needs of socially conscious young consumers, particularly as the pandemic persists globally. A Shopify study found that 68 per cent of consumers in the UK believe that shopping locally is important and 51 per cent of consumers expect to shop locally more often post-pandemic than they did before. So, while being a small business can inherently help, in order to really win, small businesses should also consider their impact on society – and be sure to communicate it with customers.

Seamless payments will be central to an exceptional customer experience

Customers are increasingly paying attention to the speed, security and convenience of the payment experience in a world where transactions are shifting from cash to cards to digital devices, and customers expect every interaction with a brand to be effortless.

A recent study found that an average of 68 per cent of people abandoned an online shopping basket due to difficulties completing the purchase, with many citing a complicated or long checkout process, so they didn’t make the purchase at all or bought the item somewhere else.

Meanwhile, in stores, contactless payments are the norm in most parts of the world. During the pandemic, many British people chose to tap to pay for the first time and instantly recognised that it’s also faster, easier and more secure. In 2020, the number of contactless payments made in the UK increased by 12 per cent to 9.6bn payments, accounting for over a quarter (27 per cent) of all UK payments with recent Visa data showing that over eight in ten (82 per cent) in-person payments are now contactless. With the contactless limit being raised to £100 in October 2021 to meet this growing demand, we’re seeing contactless payments continue to thrive, thanks in many ways to the small and mid-size businesses that are quickly adopting the technology to keep up with their customers’ expectations.

Payments isn’t just about completing a sale. The checkout experience should be – and is – a reflection of your brand. It’s also the last opportunity for small business owners to make a great impression on customers as they walk out the door (or leave your site). SMBs have to make it as frictionless as possible for customers.

Small businesses will cross borders

According to The World Bank, small and medium-sized businesses (SMBs) represent approximately 90 per cent of businesses (rising to 99.9 per cent in the UK) and more than 50 per cent of employment worldwide. Thanks to the digital adoption of the past two years and evolving technology, small businesses have a unique opportunity to bring products and services to customers around the globe.

It used to be that only big businesses could scale in a way that allowed them to access customers in other countries, but payment technology can easily enable customers to pay with local payment methods and currencies – businesses just need to be savvy enough to market themselves in a way that is enticing to different “local” audiences around the world. It is also important to keep on top of commercial and regulatory barriers, so finding a partner that supports cross-border expansion is key.

Small businesses will see more benefits from AI and machine learning

Much has been made of the ways in which artificial intelligence (AI), machine learning and deep learning are transforming large business processes from credit decisioning to inventory management. As software and hardware costs decrease, more solutions for small businesses that leverage AI and machine learning will become available. Why does that matter? Services powered by AI and ML can mean more efficiencies, more protections and ultimately more profit for the bottom line.

In many ways AI is already being adopted by small businesses behind the scenes. Organisations like Visa use AI and deep learning to make real-time authorisation decisions for small business transactions while financial services companies use the technology to offer customer instalment loans. Many tech companies that provide a service to SMBs are doing the same. Businesses should ensure their suppliers are investing in these important technologies and passing the benefits of their expertise on.

In a year that will be defined by new expectations and new experiences, the good news is that technology is opening new opportunities for businesses of any size to participate in the global digital economy.

Source: Small Business

UK SMEs are ambitious for the opportunity to regain lost ground after the pandemic, but risk being held back by a myriad of rising pressures, including rising costs and cash flow challenges.
According to Bibby Financial Services’ (BFS) annual SME Confidence Tracker survey, this difficult operating environment causes friction and fragility among smaller businesses.

Examining the views of 500 UK SME owners and decision-makers, it finds that 82% of SMEs now feel confident about their prospects this year, an increase of six percentage points over 2021, and over the last six months has 56% of companies reported an increase in sales.

But the report warns that although SMEs have duly earned their resilient reputation, this optimism is set against the backdrop of continued uncertainty. Research shows that profitability is on a knife-edge, with four out of ten now describing themselves as ‘just about going into balance’, equivalent to 2.1 million SMEs and only half describing themselves as profitable.

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Derek Ryan, CEO of Bibby Financial Services in the UK, said: “UK companies are facing a heady cocktail of problems that threaten to impact growth forecasts for 2022 and beyond, including rising inflation, skills shortages and a cost-of-living crisis that not seen on such a scale in the 21st century.Although our report highlights a stoic resilience among the UK SME community, many are still struggling to keep their heads above water and work on a daily basis instead of looking ahead to growth. “

The report highlights key concerns for SMEs, with companies ranking inflation, conflicts in Europe and supply chain disruptions as key concerns in addition to the persistent challenges posed by COVID-19.

Concerns vary from industry to industry, where SMEs in the manufacturing sector are most concerned about inflation, the rising cost of raw materials – such as steel – and staffing costs. The construction and wholesale sector SMEs are mostly preoccupied with conflicts in Europe. While the biggest concerns for carriers include cash flow, Brexit and staff shortages, as well as the shortage of truck drivers and the impact of bureaucracy on cross-border trade.

Overall, more than a quarter of companies highlighted cash flow as a concern. Nearly one in five said they need cash flow support more now than before the pandemic, and 9% said they do not even have the cash flow they need to operate on a daily basis.

When the cash flow is so crucial to the company’s survival, late or failed payments can be fatal to this new strain of ‘Just About Breaking Evens’. More than a quarter (28%) – equivalent to 1.5 million companies – say they have suffered bad debts in the previous 12 months, with amounts being written off due to customers’ non-payment or long-term default. This is significantly higher than in 2021, where 20% reported bad debt, and the report finds that SMEs have written off an average of £ 10,329 in the last year alone.

Ryan continued: “SMEs faced the pandemic with courage and now they must continue to adapt and change in order to carefully deal with the rising costs of doing business. It is clear that cash flow challenges and payment problems continue to plague companies, and it is now more important than ever that they have access to working capital to support day-to-day operations and to repay debts raised at the height of the pandemic. But they can not succeed alone; the private and public sectors, and we urge policy makers to look closely at broader tax cuts and energy subsidies to help SMEs and to ensure that they continue to play a key role in the UK’s economic recovery. “

Source: News Dubai