The FINANCIAL — As new research uncovers a £34bn economic opportunity waiting to be unlocked from Britain’s SMEs by 2021, Barclays has launched a mobile business lending service capable of providing instant loans to businesses.
Though almost a third of British SMEs are not planning on applying for a loan despite acknowledging it would boost their business, the research shows that 64% of SMEs’ turnover would increase if they successfully secured the right loan, which could generate nearly 200,000 new jobs for Britain over the next four years.
In response, Barclays has created mobile loans for businesses, making SME loans and overdrafts instantly available to its client base through the Barclays Mobile Banking app. Barclays is the first UK bank to offer the service, which radically reduces the time taken to get a loan from a matter of weeks to under an hour.
The research found that:
30% of SMEs have decided not to apply for a loan despite thinking it would boost their business. The figure rises to 39% for small businesses specifically.
SMEs who have applied for funding expect the lending process to take at least five weeks, whereas for many the funds are now available on their mobile, pre-assessed, so they can access funding within one hour.
Removing the myth that banks don’t want to lend by making loans and overdrafts available instantly on smartphones could deliver an economic boost of 106 new jobs per day (+194,000 jobs by 2021) and £34.25bn of economic growth by 2021.
In terms of the impact of new loans, manufacturing and professional services sectors should expect to benefit from the biggest economic boost by 2021, achieving an additional £1.18 billion and £1.11 billion each year, respectively.
Business owners in Yorkshire and Humberside are the most concerned, of any region, about getting their applications right when applying for funding in the future.
Ian Rand, CEO of Business Banking at Barclays, said: “We recognise that some businesses are cautious about applying for a loan, whilst many more simply do not have the time.
“Our new, pre-assessed lending gives customers the ability to see how much they could borrow on their mobile and we can get that money to them more quickly than ever so they can invest in and focus on running their businesses.”
Brexit presents new reasons to lend
The research also found that one in five SMEs believe Brexit is impacting their current or future funding requirements. Of those, the most common reasons cited were a need to start exporting to new, non-EU markets, Brexit economic uncertainty and a need to replace current employees who are EU citizens. A further one in ten (12 per cent) SMEs did not know whether they would be impacted by Brexit.
However, a quarter (24 per cent) of SMEs believe it will be harder to secure a loan in 2017, with Brexit causing economic/political uncertainty and global economic uncertainty cited as the main reasons.
Ian Rand continued: “Since the EU Referendum our appetite for lending has not diminished and we continue to lend to an SME in the UK every four minutes. We want to help SMEs be confident in their future business plans, including looking at new opportunities to export. We are particularly determined to reach out to those businesses who believe lending will be more difficult next year to see where we can help.”
Tyrone McAndrew is founder of Eco-Sparks Ltd http://ecosparks.co.uk/ a leading electrical and energy saving specialist contractor serving Hampshire and West Sussex. Last week he applied for an extended overdraft with Barclays:
“I needed an overdraft because we are looking to expand our business, buy additional advertising and take on a new person. In a trade like ours you sometimes don’t get paid for one or two months which means cash flow is really important, so having the overdraft facility is really helpful for buying materials.
“Having made the application I was sent a secure document in my Barclays Mobile Banking app, and confirmed the new overdraft with my e-signature. I then had access to the funds ten minutes later. I’ve always banked with Barclays and they’ve always been really good.”