"It is interesting, however, that many SMEs still appear to have a preference for well-known lenders, despite the number of specialist lenders in the market. "
The survey, conducted by Insights with over 75 commercial finance brokers at the Commercial Finance Roadshow, revealed that 47% of brokers said their SME clients expressed a preference for traditional lenders.
A perceived 'comfort zone' appeared to be behind this preference, with 23% indicating that business clients 'preferred to take out a loan with a household name'.
Despite this, however, over a quarter (26%) of respondents expressed a belief that SME lending should be undertaken by specialist lenders, with one adding: "SME clients like borrowing via household names - but the changing market is slowly teaching them that it can be better to explore alternatives".
When asked why brokers thought specialist lenders were a better fit for SMEs, they had a number of responses. Flexibility was high on the list, although the increased competition that comes with more lenders in a given space was also key. Several respondents noted that specialist lenders tended to have less rigid underwriting, ensuring their clients got the best deal.
The key finding from the research is that SME clients rely heavily on intermediaries' expertise - with 34% agreeing that their clients 'had no strong preference' for a particular type of lender and 48% saying their clients were 'happy to trust [the intermediary] to advise them'.
Rozi Jones, editor of Financial Reporter, said: “It’s great to see that SME clients are aware of how beneficial a good broker can be when it comes to seeking funding - it’s a testament to the hard work and expertise that brokers bring to their cases.
“It is interesting, however, that many SMEs still appear to have a preference for well-known lenders, despite the number of specialist lenders in the market. As one astute respondent pointed out, it seems that familiarity creates trust - but as brokers know, finding the right funder for your clients is based on much more than familiarity, and it’s encouraging to see that brokers are keen to fly the flag for a broader range of funding options.”
