A fall in the mean average value of leads from SMEs in the first six weeks of 2017 seems to suggest that there has been a lull in long-term planning.
We normally see a decline in December, but recently that decline has spread into January as well. This might indicate that in the current political climate, when small business pull their horns in, they’re slower to issue (or to respond to) the All Clear signal.
What SMEs need right now is quick fixes to immediate problems, rather than long-term solutions that predict and stave off future concerns. These are not million-pound investments, but low-value responses to cashflow shortfalls, or equipment that needs servicing.
Only about three per cent of leads were for loans above £500,000. For comparison, the proportion is usually in excess of 15%, although it does tend to fall as you travel further north.
While the south of England and the three Scottish cities Aberdeen, Glasgow, Edinburgh and Aberdeen are well represented, only York and Liverpool have put in strong lead volumes from the north of England.
Reading the notes left with each enquiry, you can see that small business owners are looking to react quickly to circumstance, and often it comes down to the landlord/tenant relationship. A landlord sells a property in which the business was a tenant. A coffee-shop finds asbestos while developing the premises, and has to find an extra £10k to fix the unforeseen problem. Another landlord insists on a six-month deposit on the property instead of the more usual three months. In each of these cases, a slow response could mean an end to trading.
It's tempting but slightly unrealistic to think we are in a good position to change this state of affairs. How can we tell a small business owner who is facing an immediate problem that his primary concern ought to be a possible problem that’s still a couple of years away? When there’s flood water pouring into the basement, that’s the wrong time to be listening to a sales pitch for faster broadband. Equally, when your website can’t keep up with demand, you’ll ignore the leaflets coming through the letterbox promoting plumbing firms. This is the kind of human nature that neither brokers nor lenders can turn around.
When the NACFB meets new lenders, one of the things we like to tell them is that they can’t really market themselves as “fast” – because it’s not a differentiator. Practically all alternative funders boast that they are fast, so where is the USP?
But actually, we should be shouting about it, because at this time of year it looks like that’s the number one priority for SME UK. We need lenders to have their blue lights flashing and their sirens sounding, because they’re frequently called upon with very little time to spare. It’s a time to return to the Fast and Flexible cliché!
*Rob Lankey is CEO of the National Association of Commercial Finance Brokers