Two-thirds more UK SMEs are finding it difficult to access finance from UK banks this year than in 2022, and are turning to fintechs for alternative sources of finance, according to new research by Sonovate.
The research, conducted among 500 senior decision makers at small and medium enterprises, revealed that while 26% of SMEs found it hard to come by financing from high street banks last year, that had risen to 43% in 2023.
As a result, 39% of UK businesses say that they are worried about their future.
The research, by embedded finance solutions provider Sonovate, also showed that half (50%) of SMEs are finding it harder to get the finance they need in comparison to the period before the cost-of-living crisis.
Just under half (48%) told Sonovate that banks do not understand their business needs, compared to 38% in 2022.
Some UK SMEs are turning to fintechs to meet their financing requirements, the research found, with 40% of businesses agreeing that it is easier to access finance from a fintech lender rather than mainstream banks.
In addition, 70% say their business would not have survived the current crisis if it were not for alternative finance options.
Richard Prime, co-founder and co-chief executive officer of Sonovate, said: “The wider economic situation across the UK is putting businesses of all sizes under immense financial pressure, and the inability to access the cash flow they need is exacerbating the issue tenfold.”
He added: “With banks increasingly unable to offer the level of support that businesses need, there is a significant opportunity for fintechs to step up and provide alternative finance options that will prove critical to keeping many organisations afloat.”