Small businesses finance access worsening

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On top of rising costs, access to small businesses finance is getting harder, as new research reveals that almost half (49%) of UK small businesses  have been rejected for a business loan in the past year.

The new survey, conducted by Opinium on behalf of eBay UK, spoke to small businesses across the UK about their experience of accessing loans. It finds that access to small business finance has worsened post-pandemic, despite the government’s pledges to support businesses through the Recovery Loan Scheme and other programmes.

More small businesses said they’ve been rejected for loans from both banks and government in the past year – up 4% and 14% respectively in July 2022 compared to when a similar survey was conducted on behalf of eBay UK in July 2021.

This is making it tougher for businesses to grow and prosper, as 41% of the businesses surveyed said poor access to loans or credit is stopping them investing more money into their business – up 13% from 2021.

Faced with a funding gap, personal savings (29%), credit cards (29%) and personal loans (26%) are the most common sources of alternative finance that the small businesses surveyed said they’ve turned to. As many as 1 in 10 respondents (11%) said they have re-mortgaged their house to access much-needed cash.

In May 2021, at the height of pandemic uncertainty, eBay UK announced a new small business finance product in partnership with YouLend: Capital for eBay Business Sellers (CEBS). It was designed to offer fast and flexible finance to entrepreneurs and small businesses on the marketplace, to avoid them having to endure a lengthier process through their banks or the government.

Since then, the programme has unlocked almost £70 million capital for over 4,300 eBay small business sellers. It has offered high approval rates and has supported eBay sellers who’ve taken up the funding to see a notable rise in their sales over 6 months following. This programme is still ongoing, and eBay is encouraging sellers on its site to take advantage of CEBS as a route to capital.

The current environment of inflation, cashflow issues and low consumer confidence makes it extremely difficult for small businesses to thrive. At eBay, we only succeed when the startups on our platform succeed – and the same goes for the UK economy at large.

We’re focused on making it more accessible and simpler for small businesses to set-up, grow and scale. That’s why we created Capital for eBay Business sellers – to offer fast access to capital as we emerged from the pandemic. It’s clear that access to finance remains a critical issue, and large businesses must do all they can to invest in the next generation of entrepreneurs.

– Murray Lambell, General Manager, eBay UK

Now more than ever, the issue of access to finance is compounding with inflationary pressures. The FSB’s Small Business Index for Q1 2022 found that 87% of businesses reported higher operating costs this year compared to 2021. Unsurprisingly, coping with rising prices is the main reason the respondents of eBay’s survey expected to need to take out a loan or other form of finance in the next 12 months.

Over half (57%) of respondents believe that if they were turned down for the most recent business or credit loan they applied for, they would last 6 months or less. However, this figure is down from last year – when 66% of small businesses surveyed said they’d last 6 months or less if rejected for their most recently applied for loan.

Cashflow predictability is another major challenge. 86% of small businesses surveyed say cashflow issues have had an impact on their business, while 7 in 10 say they have recently experienced a late payment from a client or customer. Some sectors appear worse affected than others by cashflow issues: agriculture is particularly hit, with 91% of respondents from that industry saying their cashflow is unpredictable; compared to 62% of those in food and drink and 47% in retail.

The research comes mid-way through eBay’s national Business Roadshow – its first ever physical regional roadshow and investment programme in the UK, in partnership with Small Business Britain and British Chambers of Commerce. eBay is investing over £1m to deliver the year-long support programme, visiting 12 cities and towns over twelve months (from April 2022) and expecting to reach thousands of small businesses.


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