There’s good news for small and medium businesses – approval of small business loans is continuing to rise, and is showing significant improvements year on year. During the first quarter of 2015, 60 percent of applications for business loans were approved by UK banks, compared to just 45 percent during the first quarter of 2014. Statistics show that the amount lent to small companies is also increasing, with £1.8 billion offered to small businesses during quarter 1, and £4.5 billion to medium sized businesses, according to a report by the BBA.
Banks Focusing More on Business Loans
The fact that banks are beginning to once again look seriously at small business lending is a good indicator of economic growth and development as the nation continues to recover from the effects of the recession. While the availability of commercial finance for small businesses – and the associated fees – may not be the most lucrative for borrowers, many banks are reporting healthier profits and are demonstrating greater confidence in the economy by once again offering lending to emerging SMEs. We’re also seeing a trend for banks to introduce new products and lending terms for businesses, including asset-based lending that’s tipped to be the ‘next big thing’ for SMEs.
Business Loan Tips for SMEs
While there’s no way to 100 percent guarantee a business loan approval, there are measures that SMEs can take during the application process that can make an approval more likely.
- Compare Lenders
By using online price comparison tools, businesses can identify banks that offer dedicated small business loans for SMEs, rather than financing designed for larger corporations. Many banks are introducing these financial products as a way of helping small businesses develop within their industry.
- Collate Business Data
It’s important to remember that the economy is still very fragile and unpredictable, which is leaving some banks a little wary of small business lending. Banks may be more likely to approve business loans to SMEs that can display accurate financial records showing an ability to meet the agreed repayment terms.
- Have a Plan
Banks that offer small business loans specifically designed to assist SMEs often want to understand more about how the money will be used to boost business and ultimately strengthen the economy. Having a plan outlining how the financing will be used internally to help a small business develop may be beneficial.