Fleximize, the SME alternative lender, estimates that between January and March 2015, banks rejected credit applications from SMEs, including loan and overdraft facilities, worth an estimated £1.36 billion. It believes this was around 23% higher than the £1.1 billion of SME credit applications rejected in Q1 2014(1) and 0.7% up on the previous quarter (Q4 2014).
Fleximize estimates that loan rejections totalled £1.09 billion in Q1 2015, or 24% higher than the £876m in Q1 2014. Fleximize also reveals that around £274m of overdraft applications were rejected in Q1 2015, which was 18% higher than in Q1 2014.
Once again, it was the small businesses that were hit hardest in Q1 2015, with the latest findings(1) showing that while over one in five (21%) applications from small businesses for overdrafts and loans were rejected by the banks, the corresponding figure for medium-sized enterprises was around 11%. Corresponding figures for Q1 2014 were around 22% and 8% respectively.
However, banks’ apparent reluctance to lend is fuelling increased demand for alternative lenders. The value of SME credit applications received by Fleximize in Q2 2015 was 27% higher than Q1. The company has loaned more than £8m to over 300 businesses since it began trading in January 2014.
Max Chmyshuk, Founder and Managing Partner at Fleximize, said: “The Chancellor’s creation of the National Living Wage will put further pressures on SMEs, many of which rely on a low-skilled workforce and will subsequently be faced with a steep rise in wage costs.
“Many SMEs are still finding it difficult to secure credit from banks, and this is leading to an increase in demand for alternative lenders like Fleximize. Unlike some of the banks, we are not constrained by archaic systems or a back-book of bad debts and we are also using more efficient and fairer systems for assessing applications.”
Fleximize offers a choice of flexible loans including revenue-based financing to small and medium sized businesses where repayments are tied to a client’s revenue flow – paying back more in good months and less when income drops. For further information on Fleximize visit http://fleximize.com or call 020 7100 0110.