SME lending trends by Funding Options by Tide

2024 is already shaping up to be an exciting year. So far, the first private spacecraft in history has successfully landed on the moon, Oppenheimer won Best Film at the Academy Awards, and we enjoyed an extra day on the 29th of February. 

But what do the next eight months look like? What kind of trends can we expect in lending? And most importantly, which financial tools are available to help your SME grow this year? 

The best way to look forward is to first look back. 

Which is why at Funding Options by Tide we’ve looked at our application data across the year 2023 and gathered together that lending data into an easy to digest blog, which we’ve paired with a few external sources and some quotes. 

SME lending trends

Join us as we take a look at some of our biggest findings from 2023 to inform our predictions for the lending trends of tomorrow. Along with some quotes from industry leaders, we’ve also gathered internal data around our lending applications which we’ve shared below. 

Lenders gear up for the modern era

“We will start to see more lenders and commercial lenders start to use open banking and open accounting to analyse real time data as part of standard practice. In fact, we are already seeing both lenders and intermediaries making this leap to speed up the real time decision process for business and enabling the lenders and intermediates to handle great volumes.” 

— Drew Johnston, Senior Business Finance Specialist at Funding Options by Tide

More borrowers turn to alternative financing

In 2023, Funding Options received nearly 130,000 applications, with an average requested amount of £100k. This marks a clear upward trend in demand since 2021, signifying the growing desire for alternative lending opportunities among individual and business borrowers. 

Digital lending streamlines SME finances

“Digital and online lending solutions have generally made life easier for SMEs. Having the ability to see multiple options in one place has streamlined the process, paving the way for faster access to credit alongside more straightforward applications. All of which stimulates competition in the market, providing SMEs with more competitive options to consider when deciding which products and services are right for their business.” 

— Kyle Eaton, Small Business Expert at Money.co.uk

Working capital drives SME lending

Of the lending applications we received in 2023, working capital received the highest number of applications by both the number of businesses applying and the total monetary amount requested per financing type. Working capital funding, designed to help businesses manage their day-to-day cash flow and increase growth, surpassed the other lending types in number of applications, receiving applications from more than 60,000 businesses. From a lender’s perspective, this shows a clear prioritisation of business expansion and financial stability. 

Growth and expansion look promising with asset finance and M&A coming in second place

While asset finance took second place in terms of number of applications, M&A came second in terms of total amount sought. Asset finance provides businesses with funding for vital equipment whereas M&A financing helps businesses fund their acquisitions and mergers. As far as amount sought, property finance came third, with asset finance coming in fourth, with refinance and invoice finance coming in last. In terms of number of applications, M&A came in third, with property finance coming in fourth, and refinance and invoice finance coming last again. This suggests a trend towards growth and expansion. 

AI comes to lending

“AI-generated tools are also now allowing lenders to perform enhanced risk assessments, while Open Banking technology is already being used for checking creditworthiness and tailoring loan rates. These types of digital tools mean borrowers can often be verified without having to upload separate documentation or go into a bank branch, for example.” 

— Michelle Stevens, Business Finance Expert at Finder

Momentum builds for open banking

As of October 2023, according to the Open Banking report, 1 in 9 Brits now use open banking services. Other reports suggest the number of open banking users has hit 7 million. This trend towards open banking has been seen among providers as well as consumers, according to FICO, almost 250 Open Banking providers have been approved for use in the UK. 

Find a suitable lender with Funding Options by Tide 

Whether you’re looking for working capital funding to help you manage your day-to-day cash flow and increase business growth, or asset finance with a structured repayment plan and fixed interest rates to enhance your businesses financial stability, we can help by connecting you with more than 120 UK lenders. 

Search for a suitable lender today with Funding Options by Tide. 

Please note that the information above is not intended to be financial advice. You should seek independent financial advice before making any decisions about your financial future.

It’s important to remember that all loans and credit agreements come with risks. These risks include non-payment and late-payment of the agreed repayment plan, which could affect your business and personal credit score and impact your ability to find future funding. Always read the terms and conditions of every loan or credit agreement before you proceed. Contact us for support if you ever face difficulties making your repayments.

Funding Options, now part of Tide, helps UK firms access business finance, working directly with businesses and their trusted advisors. Funding Options are a credit broker and do not provide loans directly. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. Funding Options will receive a commission or finder’s fee for effecting such finance introductions.