THE BIG BUSINESS OF SMALL BUSINESS - APRIL 2019 - Funding Circle
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THE BIG BUSINESS OF SMALL BUSINESS APRIL 2019
Tom Morris, co-founder of the Bobbin bicycle company.
The Big Business of Small Business
TABLE OF CONTENTS
Foreword5
Executive summary6
1. Introduction12
2. United Kingdom16
2.1 Small businesses’ access to finance 16
2.2 Funding Circle’s UK lending profile 20
2.3 What is Funding Circle’s full economic impact in the UK? 23
2.4 Why do small businesses use Funding Circle? 25
3. United States30
3.1 Small businesses’ access to finance 30
3.2 Funding Circle’s US lending profile 34
3.3 What is Funding Circle’s full economic impact in the US? 37
3.4 Why do small businesses use Funding Circle? 38
4. Germany44
4.1 Small businesses’ access to finance 44
4.2 Funding Circle’s German lending profile 48
4.3 What is Funding Circle’s full economic impact
in Germany? 50
4.4 Why do small businesses use Funding Circle? 51
5. The Netherlands56
5.1 Small businesses’ access to finance 56
5.2 Funding Circle’s Netherlands lending profile 59
5.3 What is Funding Circle’s full economic impact
in the Netherlands? 61
5.4 Why do small businesses use Funding Circle? 62
6. Conclusion68
Appendix 170
APRIL 2019 3
Kate Lester, owner of a California-based luxury interior design firm.
The Big Business of Small Business
FOREWORD
Small businesses mean big business. They keep When we give small businesses the power to
our high streets bustling, connect us with our go further, the economic output is enormous.
local communities, and power the economy on Within this report, it’s incredibly humbling
an incredible scale. Our business was founded to see the significant contribution that small
to give them a better deal, and they remain at businesses have on the global economy as
the heart of what we do every day. a result of accessing finance through our
platform. In 2018 alone, these businesses
An astonishing 99 percent of all firms are small unlocked 115,000 jobs and contributed £6.5
businesses,1 and they play a vital role in society billion to GDP across our four markets, with the
by driving economic growth, employment benefits reaching all corners of each country.
and innovation. Despite this, they are often
overlooked and underserved, with around From local cafes and quirky gift shops
53 percent saying it’s difficult to access to trusted autobody shops and friendly
finance for growth.2 A factor at play here is the accountants, small businesses keep our world
lingering effect of the financial crisis some 10 running. That’s why we’ve put their needs at
years ago, and the impact it has had on the the forefront of our mission. We’re in the big
small business lending market. business of small business.
This report reveals that very little has changed
since then. While the number of small
businesses has grown steadily since 2008,
they continue to represent a tiny proportion
of banks’ overall balance sheets. What this
research also points to is a pattern of small
firms being at a disadvantage in terms of the
support they receive from the banks, compared
to larger businesses across our markets. As
a result, a growing number are moving away
from thinking “bank first”.
Part of the story here is the pace at which
technology is transforming and evolving
the financial landscape. This is particularly
noticeable for consumers, with a third now
using some form of FinTech. Small businesses
are beginning to reap the rewards of this digital
shift as well, with tech firms such as Square
and Shopify now offering dedicated services to
meet their needs. When it comes to accessing
finance, online lending platforms offer the 21st-
century approach: a simple online application
powered by innovative technology and
advanced data analytics, accessible no matter Samir Desai
where a business is based. CEO and co-founder of Funding Circle
1
Source: OECD, ‘SMEs and Entrepreneurship’ (http://www.oecd.org/cfe/smes/).
2
Oxford Economics (2017), ‘SME Strategies for Success’: a global study for American Express. 5
The Big Business of Small Business
EXECUTIVE SUMMARY
ACROSS THE WORLD, THE FINANCIAL LANDSCAPE IS
CHANGING FAST
Technology is transforming the way consumers access their
money and choose financial products. It is estimated that a third
of all digital consumers around the world now use some form of
financial technology (“FinTech”)—from online banking to apps
that allow you to take a loan, roll up savings each week, or invest
in stocks and shares.1
Small businesses—poorly served by traditional banks for
decades—are also catching up in their use of FinTech. The
financial services landscape for these firms has changed
drastically in the last 10 years, following innovations such
as the introduction of payment apps for small retailers, and the
emergence of online lending platforms.
Such developments are crucial to global economic prospects, given
that small businesses comprise 99 percent of firms and account for
more than half of all employment in industrialised countries.
YET TRADITIONAL BANKS CONTINUE TO HOLD SMALLER
When changes in UK bank FIRMS BACK
overdrafts are taken into
account, net lending to SMEs Small businesses continue to be relatively unimportant to banks.
was negative in 2018—meaning Lending to these customers makes up a very small proportion
UK banks collected more in of banks’ overall balance sheets, and this segment of the market
repayments than they gave out is generally observed to be the most poorly served. In all four
in new loans and overdrafts. countries studied for this report, we see a pattern of small firms
receiving harsher terms on loans that are granted, relative to
their larger peers.
In the UK, the flow of net bank lending to small and medium-
sized enterprises (SMEs) totalled just £518 million in 2018,
compared with an annual average of £2 billion over the
previous three years. When changes in bank overdrafts are
taken into account, net lending to SMEs was actually negative
in 2018— meaning the UK banks collected more in repayments
than they gave out in new loans and overdrafts to SMEs.
6 1
E&Y, (2017), ‘E&Y Fintech Adoption Index 2017; The rapid emergence of FinTech’.
The Big Business of Small Business
In the US, while bank lending to commercial and industrial
customers is increasing, small businesses are again being left
out. Banks relaxed their approval standards for loans to large
and middle-market firms much more than to small firms in 2018,
and further disadvantaged SMEs in how they changed the terms
and conditions on these loans.
In the Netherlands, Dutch banks have yet to reverse the
deterioration in terms offered to SMEs, relative to larger firms,
that became evident nearly 10 years ago. Moreover, bank
lending to non-financial businesses continued to fall in 2018—
greatly affecting firms applying for smaller loans.
In Germany, the smallest firms face stringent terms and
conditions and high administrative costs imposed by banks.
While small and medium-sized firms have reported an easing of
interest rates over recent years, charges for micro‑businesses
(firms with between one and nine employees) remain
comparatively elevated across all types of funding.
SMALL FIRMS’ DEMAND FOR FINANCE IS GROWING FAST—
AND THEY ARE TURNING TO FINTECH The stagnation in bank lending
is in stark contrast to the rapid
The stagnation in bank lending to SMEs is in stark contrast expansion in SME activity. They
to the continued rapid expansion in SME activity across the are responsible for 60 percent
four countries featured. The overwhelming majority of firms of all jobs in industrialised
in industrialised countries are SMEs—and their numbers are economies, and almost the
growing all the time. In 2018, for example, the total number of same proportion of GDP.
UK-based SMEs was five percent higher than in 2015.
Together, SMEs are responsible for 60 percent of all jobs in
industrialised economies, and almost the same proportion of
the billions in GDP that these countries generate. An increase
in available finance will therefore have a major impact on all four
economies in this study, helping to fund further job creation,
boosting economic output, and raising significant extra tax
revenues.
Against the backdrop of falling bank lending and a growing
feeling that bank loans are not relevant to them, many SMEs are
showing increased demand for other forms of external finance.
The rapid expansion of online lending platforms is part of this
trend, offering small firms greater choice and flexibility. Across
the four countries, we see that SMEs are increasingly applying
for, and gaining, loans through online platforms, as they move
away from thinking “bank first”.
7
The Big Business of Small Business
FUNDING CIRCLE IS FAST BECOMING THE FIRST CHOICE
FOR SMALL BUSINESSES IN ALL OF ITS MARKETS
Lending through Funding Circle has grown rapidly in
2018. Across its four markets—the UK, US, Germany and the
Netherlands—the online lending platform enabled £2.3 billion
in new loans to SMEs last year. The total value of loans under
Funding Circle’s management also grew markedly, reaching
£3.1 billion at the end of 2018—some 55 percent higher than
the previous year. This growth continues to reflect two key
advantages, according to our surveys of Funding Circle clients
in all four countries: both the speed and simplicity of its
application and approval process.
Some 73 percent of customers approached Funding Circle
first for their new loan in 2018, without having previously
applied for a bank loan. In the UK, 84 percent of the surveyed
customers said Funding Circle was their first port-of-call for a
loan, while in Germany the figure was 75 percent. Furthermore,
82 percent of customers surveyed reported that they would
approach Funding Circle first for finance in the future, rather
than a bank.
THE ECONOMIC IMPACT OF LENDING THROUGH
£6.5 bn
FUNDING CIRCLE
In total, Funding Circle’s loans under management at the end
of 2018 supported a £6.5 billion contribution to Gross Domestic
Annual contribution to GDP Product (GDP) across its four markets. This is a year-on-year
supported by loans increase of 56 percent in real terms, and means that in 2018,
through Funding every £1 lent through Funding Circle enabled small businesses
Circle across its to contribute more than £2 to the economies they operate in, in
four markets in 2018. terms of additional GDP.
Loans taken through Funding Circle enabled 115,000 jobs in
This is a year-on-year increase of these four countries—54 percent higher than its loans were
56 percent, in real terms. estimated to have supported at the end of 2017.
The activity and employment supported by these loans also
raises significant tax revenues for local and central governments.
The total loans under management at December 2018 are
estimated to have generated £2 billion in annual tax receipts
in Funding Circle’s markets, up 39 percent in real terms on the
amount raised in 2017.
8
The Big Business of Small Business
FUNDING CIRCLE’S
ECONOMIC IMPACT
IN 2018
TOTAL IMPACT Direct Indirect Induced
GDP CONTRIBUTION EMPLOYMENT TAX REVENUES
£6.5 billion 115,000 jobs £2.0 billion
up 56% from 2017* up 54% from 2017 up 39% from 2017*
£2.2 bn
£3.2 bn
62,800 £1.0 bn
£1.1 bn
£0.3 bn
18,700
33,400 £0.7 bn
£4.1 billion 72,000 jobs £1.0 billion
$2.8 billion 38,000 jobs $1.1 billion
€216 million 3,200 jobs €70 million
€140 million 1,900 jobs €47 million
Every £1 million lent through Funding Circle
£3.1 … contributes £2 million to GDP
billion
… supports 37 jobs
55% Loans under … and generates
£635,000 in taxes.
growth in value of management
loans since 2017** at end of 2018
* Increase in real terms; totals may not sum due to rounding
** Value of all loans under Funding Circle management, end 2018 vs end 2017 9
The Big Business of Small Business
ECONOMIC IMPACT IN THE UNITED KINGDOM
Despite uncertainty as a result of the UK leaving the EU
and fragile economic growth, SME demand for finance has
remained strong. With net lending by banks falling so that
the value of outstanding bank loans held by SMEs was 16
percent lower than in 2011, Funding Circle has more than
doubled net lending to SMEs from £345 million in 2016 to
£723 million in 2018, when the platform’s net lending was
some £200 million more than the entire UK banking system.
The value of loans under Funding Circle management in the
UK has also grown strongly, reaching £2.2 billion at the end
of 2018—up from £1.6 billion a year earlier—and supporting
an annual contribution to UK GDP of £4.1 billion.
This is estimated to have sustained 71,900 jobs and generated
some £1 billion in business and labour taxes in 2018.
115,000
ECONOMIC IMPACT IN THE UNITED STATES
With the US economy growing robustly in 2018, small
and medium-sized firms have had a strong appetite for
Total number of jobs external finance. On average across the year, 60 percent of
supported by lending small firms had undertaken capital expenditure within the
through Funding prior six months. New lending through Funding Circle has
Circle in 2018. expanded to meet this demand, standing 54 percent higher
than its level at the end of 2017.
This is a 54 percent increase on
Small US businesses continue to report difficulty in
the previous year.
accessing credit, with the smallest firms facing the most
severe difficulties. According to the Federal Reserve’s Small
Business Credit Survey, 32 percent of firms with between
one and nine employees reported experiencing challenges
obtaining credit over the previous year. This figure drops to
18 percent for firms with between 50 and 499 employees.
Lending through Funding Circle had a sizeable impact in
the US economy in 2018. We estimate that it supported a
$2.8 billion annual contribution to US GDP, some 38,000
jobs, and $1.1 billion in tax receipts.
10The Big Business of Small Business
ECONOMIC IMPACT IN GERMANY
The ECB’s SAFE survey suggests that German micro-
businesses (the “S” in SMEs) feel the onerous application
£2.0 bn
Annual tax receipts enabled
procedures and substantial collateral requirements that banks
by loans through
and other lenders require limit their access to external finance.
Funding Circle
across its four
In contrast, Funding Circle’s operations in Germany
markets in 2018.
continue to grow rapidly—responding to the needs of
micro-businesses and other firms seeking loans of between
€5,000 and €250,000. In all, 1,285 new loans were issued This is a year-on-year increase of
through the platform in 2018, over 85 percent more than 39 percent, in real terms.
the previous year. The total value of these new loans rose
even faster, by 92 percent.
Based on the value of loans under its management at the end
of 2018, Funding Circle is estimated to have sustained a €216
million annual contribution to German GDP, some 3,200 jobs,
and €70 million of tax receipts to pay for vital public services.
ECONOMIC IMPACT IN THE NETHERLANDS
Against a backdrop of persistent decline in bank lending
to Dutch SMEs, and banks’ continued extension of inferior
terms and conditions to SMEs relative to larger companies,
some 83 percent of Dutch small firms regarded bank loans
as irrelevant in the ECB’s 2018 H1 survey on enterprises’
access to finance. This was higher than the EU-wide
average of 76 percent.
Small businesses are taking advantage of the greater choice
of lenders, increasingly applying for credit at non-bank
sources of finance. In the same survey, 19 percent of Dutch
SMEs reported an increased demand for online and other
types of non-bank lending over the previous six months.
Funding Circle is an increasingly important source of
finance for these small businesses. We calculate that loans
under its management at the end of 2018 supported a total
contribution to the Netherlands’ GDP of €139 million, enabled
1,900 jobs, and generated €47 million in tax receipts.
11The Big Business of Small Business
1. INTRODUCTION
The overwhelming majority Fig. 1: Loans to SMEs as a share of banks’ total balance sheets,
of firms in industrialised by country
countries are small and
medium-sized enterprises 2.4%
(SMEs). Together, they are
2.1%
responsible for 60 percent of 2.1%
all jobs, and almost the same
proportion of the billions in GDP
1.8%
that these countries generate.2
Historically, small businesses 1.5%
have depended on traditional
banks for access to the 1.2%
credit they need to survive
and flourish. But this has
0.9%
served them poorly since the
0.7%
financial crash. Over the past 0.6%
decade, banks’ willingness 0.6%
All loans to
to lend to small businesses firms with a All commercial Loans under €1
has deteriorated markedly, 0.3% debit account and industrial million to firms
with clear evidence of major turnover below loans under with revenue
disparities between their £25 million $1 million under €50 million
attitude to lending to larger 0.0%
UK US The Netherlands
businesses, versus what is
being offered to SMEs. Source: Bank of England, US Federal Reserve, FDIC, ECB, De Nederlandsche Bank
For example, while the value Across the world, today’s
Loans to small businesses of new bank lending to large SMEs are a crucial part of the
are relatively unimportant businesses increased by 43 future economic landscape,
to banks, comprising a very percent in the UK between with many start-ups and small
small proportion of their total 2015 and 2018, it decreased firms operating in tomorrow’s
balance sheet. to SMEs by three percent growth industries. As an
over the same period. In example, six percent of SMEs
part, this is because loans that were larger than sole
to small businesses are traders operated in the digital
relatively unimportant to sector in the UK in 2018.4,5
banks, comprising a very However, because many of
small proportion of their total these firms are “asset light”,
balance sheet (Fig. 1).3 they are not well catered for
by traditional lending as banks
typically require assets to
secure finance against.
2
OECD, (2017), ‘Small, Medium, Strong. Trends in SME Performance and Business Conditions’, 15 May.
3
Data on German banks’ stock of outstanding loans to SMEs was unavailable.
12 4
ONS, (2015), ‘What defines the digital sector?’, 8 October.
5
BEIS, (2018), ‘Business Population Estimates for the UK and regions 2018’, 11 October.The Big Business of Small Business
This is particularly significant The next four chapters of this
in the digital sector, where report focus, in turn, on each Economic output in the digital
economic output across the of Funding Circle’s markets, sector is forecast to grow
UK, US, Germany, and the starting with the UK. In each by 43 percent over the next
Netherlands is forecast to case, we begin by investigating decade, more than twice the
grow by 43 percent over the the economic landscape for growth forecast for the four
next decade, in real terms.6 small businesses in terms of countries’ overall GDP.
This is more than twice the their access to finance, and
growth forecast for these four other issues. We then present
countries’ overall GDP, which a profile of the loans extended
is predicted to increase by 19 through Funding Circle in that
percent in real terms over the country, before revealing the
same period (2018 to 2028). total economic impact of the
activity supported by these
The banks’ adverse treatment loans, in terms of GDP, jobs,
of SMEs is clearly a concern for and taxes.
future prosperity, as it severely
limits small businesses’ pace Finally, we present the results
of development. And this is an of our latest surveys of
issue from the very start of the small businesses that held
application process: the length loans under Funding Circle
of time taken to apply for management at the end of
credit and receive a decision 2018—both to understand
from a bank can prove costly what motivated them to seek
for SMEs, leading to foregone finance, and to gain insight
productivity—an issue into their experiences with the
highlighted repeatedly by small lending platform.
businesses around the world.
These businesses were also
As a result, online lending surveyed with regard to
has become a key source of their revenues, employment,
finance for SMEs, with Funding procurement of goods and
Circle establishing itself as services, imports, and tax
the leading small business payments. This information,
loans platform in all four of along with Funding Circle’s
its markets. The benefits of loan book data, was used to
lending platforms, according the calculate our economic
to small businesses, include impact results for each
more focused products, faster country.
credit decisions, improved
funding chances, and the lack
of collateral requirements.7
6
Forecasts are from Oxford Economics’ Global Industry Model.
7
The Federal Reserve Banks, (2018), ‘Small Business Credit Survey 2017; Report on Employer Firms’, 22 May. 13The Big Business of Small Business
CASE STUDY:
BOBBIN BICYCLES
Sian Emmison is the co-founder, with her Transforming themselves into an online
husband Tom, of the Bobbin bicycle company— company that deals directly with individual
established almost a decade ago because “we customers was a huge challenge—and one that
wanted to spread the joy of cycling to people required significant upfront funding. “The bank
who love life but aren’t bike nerds”. In other we’d been with for years had been incredibly
words, people just like them. unhelpful—they just weren’t interested at
all, which really surprised me. To them, we
“From the start,” Sian explains, “we were probably looked too small.”
trying to put the idea in people’s heads that
cycling was a really good way to get around— In contrast, Sian says, Funding Circle was much
particularly for women. Eighty percent of our more open to their plans. The first loan was
customers are female, which is very unusual in secured in December 2016, “in only a couple
the bike trade.” of weeks”—and the bright new Bobbin website
launched the following June. “Since then our
These brightly coloured bikes gained an business has really taken off. The growth has
immediate following. Based in East London, been really steep.”
their cottage business grew steadily through
a UK distributor, who imported the finished In the first year, however, they still had some
bikes from Asia. Everything appeared to be very large trade commitments. To achieve the
going swimmingly—yet Sian and Tom knew a “full pivot” demanded a further loan, and the
dramatic shakeup was needed if the company couple had no qualms about going back to
was to realise its full potential. Funding Circle in early 2018.
Sian describes the 2016 Brexit referendum “We wanted to move as much business to direct-
as their snapping point. “We said, ‘We’ve to-consumer as we could,” Sian explains. “We
got to start selling our bikes online, direct to thought it was a no-brainer at the time, but we’ve
the consumer. We’ve got to bring all of that actually gone way past our goal. We’d hoped
business in‑house.’” to turn over about the same amount but make
more profit. In fact, we’ve turned over a lot more,
so things are looking very rosy.”
14The Big Business of Small Business
15The Big Business of Small Business
2. UNITED KINGDOM
2.1 SMALL BUSINESSES’ ACCESS TO FINANCE
Small firms have continued Fig. 2: New UK bank lending to non-financial businesses of
to miss out on the recovery all sizes
in UK bank lending to
businesses. While gross £ billion per quarter
lending by UK banks to the 80
non-financial business sector SMEs Large businesses
has grown significantly—up 30 70
percent in 2018 Q4, compared
60
to three years earlier8—these
figures mask considerable
50
disparity in the growth of new
bank lending by customer 40
size. This is evidenced by
Bank of England data which 30
shows that, while the value
of new bank lending to large 20
businesses has increased by
43 percent over this period, 10
it has decreased to SMEs by
0
three percent (Fig. 2).9
2011Q2 2012Q4 2014Q2 2015Q4 2017Q2 2018Q4
Source: Bank of England
Consequently, the flow of net As a result, the value of
While the value of new bank bank lending to SMEs (i.e. new outstanding bank loans held
lending to large businesses lending minus repayments) by SMEs—some £166 billion—
increased by 43 percent over totalled just £518 million was still 16 percent lower at
the past three years, the value in 2018, compared with an the end of 2018 than in April
to SMEs decreased by three average of £2 billion per 2011. As Fig. 3 shows, from 2011
percent in the same period. annum over the previous to mid-2015, banks decreased
three years. When changes the volume of lending to
in bank overdrafts are taken firms of all sizes. Since then,
into account, net lending to the loans they issue to large
SMEs was actually negative firms have recovered quite
Taking into account changes in 2018, at minus £95 million. significantly, while those issued
in bank overdrafts, net lending Put simply, this means that to SMEs have stagnated.
to UK SMEs was negative in the banks collected more
2018. Banks collected more in in repayments than they
repayments than they gave out gave out in new loans and
in new loans and overdrafts. overdrafts to SMEs.
8
Source: Bank of England. These figures relate to lending by all ‘monetary financial institutions’, but as the majority is accounted for
by banks, we refer to ‘bank lending’ for the sake of simplicity. All lending figures are in cash terms, i.e. not adjusted for inflation. The
16 figures for new gross lending exclude changes in overdraft levels.
9
In the banking statistics published by the Bank of England, SMEs are defined as firms with an annual turnover on their main
business bank account of less than £25 million.The Big Business of Small Business
Fig. 3: Value of outstanding bank loans to non-financial businesses, by firm size
Indices, April 2011=100
100
All businesses SMEs Large businesses
98
96
94
92
90
88
86
84
82
80
Apr-11 Apr-12 Apr-13 Apr-14 Apr-15 Apr-16 Apr-17 Apr-18
Source: Bank of England
Banks also continue to treat Since then, the survey On the non-price side, the
SMEs differently from their suggests banks have Credit Conditions Survey
larger counterparts in the continued to favour larger shows that banks have eased
terms and conditions they firms when changing their the covenants placed on larger
charge on loans. The Bank interest rate spreads, although borrowers to a far greater
of England’s latest Credit to a much lesser degree— degree than on SMEs. This
Conditions Survey shows there meaning that SMEs continue relates to the behavioural
was a significant easing in the to pay higher interest rate conditions that banks place on
interest rate spread that banks spreads than their larger borrowers in order to obtain
charged on loans to large counterparts. The survey also their loans.
businesses between 2013 and points to a discriminatory
early 2016—but that this did policy on the fees and
not occur on loans to SMEs commissions that banks have
over the same period. charged on loans in recent
years, again favouring large
versus SME customers.
17The Big Business of Small Business
Fig. 4: New business lending to SMEs via the platforms of P2PFA members
£ million per quarter
600
500 527
460
400
407 415 420
349
300 321 337 331
200 215
188 196
164 179
100 125 130
111
82
0
3
4
1
2
3
4
1
2
3
4
1
2
3
4
1
2
3
4
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
15
16
17
18
15
16
17
18
14
15
16
17
18
14
15
16
17
18
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
Source: P2PFA
The stagnation in bank The lack of growth in bank
5%
lending to SMEs contrasts lending to SMEs does not,
with the ongoing expansion therefore, reflect a lack of
in SME activity. In 2018, the need for funds on their part.
total number of UK-based On the contrary, an increase in
Increase in total number of
SMEs (defined as firms with available finance would help
UK-based SMEs between 2015
less than 250 employees) was fund the sector’s expansion
and 2018.
five percent or 266,000 firms and job creation.
higher than in 2015—and there
The number of people was a similar five percent rise SMEs are increasingly
employed by UK SMEs in the subset of “small firms” applying for—and gaining—
increased by four percent (less than 50 employees).10 loans through online
over the same period. Similarly, the number of people platforms, while moving away
employed by small firms and from thinking “bank first”.
all SMEs in 2018 were both four The latest available BEIS Small
percent higher than in 2015. As Business Survey, undertaken
a result, employment across in late 2017, shows that
the SME sector now exceeds five percent of SMEs applying
16 million, accounting for for external finance over
60 percent of the UK’s total the previous 12 months had
private sector workforce. applied to a lending platform—
up from one percent in 2014.
The share applying for a bank
loan fell from 48 to 38 percent
over the same period.11
10
BEIS, Business Population Estimates for the UK and regions 2018, 11 October 2018.
18 11
BEIS, Small Business Survey 2017, May 2018. Here, SMEs are “SME employers”, with 1-249 employees.The Big Business of Small Business
Reflecting these trends, new After adjusting for inflation, However, there is arguably
lending to businesses via the business investment was six a case for further extending
member platforms of the Peer- percent lower in 2018 Q3 than Exchequer-backed lending to
To-Peer Finance Association in 2017 Q4. Furthermore, the SMEs via lending platforms.
(P2PFA—an industry trade January 2019 CBI Industrial During the financial crisis of
body that includes Funding Trends Survey showed more 2008-09 and its aftermath,
Circle and accounts for most UK manufacturers expected the Asset-backed Securities
of such lending) was £1.8 to cut spending on buildings, Guarantee Scheme proved
billion in 2018.12 This was 28 plant, and machinery in the year successful in supporting
percent higher than in 2017, ahead than to increase it. Some mortgage-backed lending,
and more than three times the 58 percent of respondents but had little impact on
value seen in 2015 (Fig. 4). to this survey also cited lending to small businesses.
“uncertainty about demand” With the SME financing
P2PFA members’ flow of net as a factor constraining their landscape having changed
lending reached £908 million investment intentions.13 so significantly since then,
in 2018—more than double the lending platforms can
value seen two years earlier. Given this outlook, it is offer a new means for the
This is in sharp contrast to reassuring that the importance government to support small
net lending from the banks of supplying funding to business activity, demand,
to small businesses, which SMEs—and in particular, the and employment.
fell by 104 percent over the supply of non-bank sources of
same period. finance—is recognised in the
UK government-set objectives In November 2018, the British
As well as offering a source of the British Business Bank Business Bank announced a
of funds to expanding SMEs, (BBB). The first two of its new commitment to lend up
lending platforms offer a four prescribed goals are to to £150 million to UK small
potential economic lever for “increase the supply of finance businesses through the Funding
policymakers during times of to smaller UK businesses where Circle platform.
economic uncertainty. Amid markets do not work well”, and
heightened uncertainty about to “help create a more diverse
prospects for the UK in the finance market for smaller
face of Brexit and the decline businesses, with a greater
in the growth of world trade, choice of options”.
UK business investment in capital
assets such as new buildings and To help achieve these goals,
machinery has declined. This has, in November 2018 the BBB
in turn, acted as a drag on the announced a new commitment
national economy. to lend up to £150 million to
UK small businesses through
the Funding Circle platform.
This is expected to benefit
some 2,000 firms, based on an
average loan size of £70,000.
12
This is the latest data available.
13
CBI (Confederation of British Industry), Industrial Trends Survey, January 2019. 19The Big Business of Small Business
2.2 FUNDING CIRCLE’S UK LENDING PROFILE
In 2018, the value of loans Fig. 5: Flow of new and net lending to UK SMEs through
originated by Funding Circle to Funding Circle
small UK businesses expanded
rapidly. Over the year, new £ million per annum
lending by Funding Circle’s 1,600
New lending Net lending
investors amounted to £1.5 1,525
1,400
billion (see Fig. 5). Net lending
through the platform (the 1,200
difference between new lending 1,156
1,000
and capital repayments)
followed a similar growth 800
trajectory, increasing from 723
£598 million in 2017 to £723 600 652
598
million in 2018—a 21 percent 400
increase, following the 50 399
percent gain seen a year earlier. 200
0
In 2018, £723 million of 2016 2017 2018
net business lending was Source: Funding Circle
extended through Funding
Circle—some £200 million
more than the entire UK Fig. 6: Net lending to SMEs through Funding Circle, and
banking system (see Fig. 6). by UK banks
This pattern is in complete £ million per quarter
contrast to that seen during
1,200
the year to June 2016—just
before the UK’s referendum 900
on EU membership—when net
lending by the banks totalled 600
£3.5 billion, compared with 300
the £345 million lent through
Funding Circle. 0
-300
£723 million
-600
-900
Via Funding Circle By the banks
-1,200
Total net business lending 2013Q4 2014Q4 2015Q4 2016Q4 2017Q4 2018Q4
extended through Funding Circle Source: Funding Circle, Bank of England
in 2018.
This is some £200 million
more than was extended
through the entire UK banking
system that year.
20The Big Business of Small Business
The total value of loans under Fig. 7: ‘Stock’ measures of lending to UK SMEs through
Funding Circle’s management Funding Circle
has also increased, reaching
£ billion
£2.2 billion at the end of
4.5
2018. This represents a Cumulative lending
175 percent rise since June 4.0
Loans under management
2016 (see Fig. 7). Cumulative 3.5
business lending since the
platform launched in August 3.0
2010 had reached £4.2 billion 2.5
by December 2018, compared 2.0
with £1.1 billion in June 2016.
1.5
Funding Circle facilitates 1.0
lending to businesses in all 0.5
parts of the UK, no matter
how rural.During 2018, nearly 0.0
Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18
21,000 new business loans
Source: Funding Circle
were arranged through the
platform. By country and
region, the distribution of reports this region has seen Funding Circle facilitates lending
loans broadly matched that the biggest reduction in bank to businesses in all parts of the
of the UK’s SME population branches since 2015 – some UK. During 2018, nearly 21,000
(see Fig. 8). Funding Circle’s 425, or 13 percent of all branch new business loans were arranged
over-indexation in the North closures in that period.14 through the platform.
West is important, as Which?
Fig. 8: Regional distribution of new loans granted via Funding Circle, versus total SME distribution
% of new UK loans via Funding Circle in 2018 % of total UK SMEs
North East
North West
Yorkshire & H.
East Midlands
West Midlands
East of England
London
South East
South West
Wales
Scotland
Northern Ireland
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%
Source: Oxford Economics; Funding Circle; BEIS % of businesses
14
Which?, Bank branch closures: is your local bank closing? Jan 2019. 21The Big Business of Small Business
Finance was granted to firms Fig. 9: New Funding Circle business loans in 2018,
located in every one of the UK’s by postal areas
121 postal areas, from the far Number of loans
south-west of England, to the
north of Scotland. Fig. 9 shows 0
how this translates into loans by 1-25
local authority area, with SMEs
in nearly all such areas accessing 26-50
finance through Funding Circle. 51-100
Between 2007 and 2017, the 101-200
number of bank branches fell 201-300
by 37 percent across the UK.15
While these closures affected 301+
both metropolitan and rural
areas, their impact has typically
been more negative in rural
areas, due to the lack of locally-
available alternatives. According
to Which?, the 10 local authority
areas experiencing the most
bank closures between 2015
and 2018 included the rural
areas of Cornwall, Highland, and
Wiltshire. In 2018, Funding Circle
facilitated 181, 47, and 98 loans
respectively to enterprises in
these areas.
Lending through Funding Circle
reached businesses in the postal
areas of England’s 20 most
deprived neighbourhoods in
2018. A similar picture is seen in
the rest of the UK.
Source: Funding Circle; Oxford Economics
Lending through Funding as Hull, Grimsby, Burnley,
Circle in 2018 reached and Mansfield. A similar
businesses in the same postal picture is seen in Scotland,
areas as England’s 20 most Wales, and Northern Ireland,
deprived neighbourhoods.16 with loans being granted to
These include neighbourhoods businesses in Paisley, Glasgow,
in and around seaside Rhyl, Wrexham, Belfast, and
towns such as Clacton, Derry City, among other
Blackpool, Lowestoft, and areas of particular economic
Great Yarmouth, and in “de- disadvantage.17
industrialised” localities such
15
House of Commons Library, Briefing Paper: Bank Branch Closures, 2018,
16
Based on Department for Communities and Local Government, English Areas of Deprivation 2015.
22 17
Scottish Government, Scottish Index of Multiple Deprivation 2016; Welsh Government, Welsh Index of Multiple Deprivation 2014;
Northern Ireland Statistics and Research Agency, Northern Ireland Multiple Deprivation Measure 2017.The Big Business of Small Business
Fig. 10: Projected real annual GDP growth in key customer industries, and their shares of loans
under Funding Circle management at end 2018
Info. & communication 3.1% 9%
Professional services 2.5% 12%
Business support 2.5% 12%
Health & social work 1.8% 4%
Catering & hotels 1.8% 5%
Total economy 1.7% 100%
Wholesale & retail 1.7% 19%
Construction 1.5% 14%
Manufacturing 1.1% 9%
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5%
Source: Oxford Economics Global Industry Model Percent per annum, 2018–2028
While Funding Circle’s lending 2.3 WHAT IS FUNDING CIRCLE’S FULL ECONOMIC IMPACT IN
profile is representative of THE UK?
the UK SME sector in very
broad terms, there is some Based on our survey of a result of the loans through
bias towards industries with UK SMEs with loans under Funding Circle. We calculate
better-than-average growth Funding Circle management that 39,200 jobs and £600
prospects, including the six at the end of 2018, we million in UK tax revenues were
percent of SMEs that are in calculate that lending also directly supported by
the digital sector and those through the platform these loans.19
that have embraced the directly supported £2.2 billion
rapid adoption of digital of UK GDP, and 39,200 jobs. But the contribution to the
technology. As illustrated Scaling up from the sample, national economy does
in Fig. 10, three of these key we find that Funding Circle not end there. Two further
customer sectors—professional clients generated a combined channels can be considered:
services, business support annual revenue of £41.5 billion— the “indirect impact”, which
services, and information & of which 7.8 percent can be captures the support for
communication—are expected allocated to the platform’s activity in Funding Circle’s
to grow at a significantly activities.18 Of this loan-related clients’ UK supply chains as
faster pace than the wider UK revenue, the firms’ employment a result of their purchases
economy over the next decade. and capital costs plus net of inputs; and the “induced
Between them, SMEs in these profits accounted for some impact”, which reflects the
three sectors currently employ £2.2 billion. This represents support provided to the
4.3 million people—26 percent the “direct” contribution to the wider economy by the wage-
of all SME workers, and 16 UK’s gross domestic product funded expenditure of all these
percent of the entire UK private (GDP—the key measure of the firms’ staff.
sector workforce. nation’s economic activity), as
18
Business clients with outstanding loans as of 31 December 2018. Scaling up from the survey sample to the overall total is undertaken
on an industry-by-industry basis. The share attributable to Funding Circle is calculated as the share of the Funding Circle loan in total
liabilities on an industry by industry basis. 23
19
These tax revenues comprise corporation tax, business rates, taxes on business purchases (such as fuel duty), employers’ and
employees’ national insurance contributions, and employees’ income tax. Survey respondents were not asked for tax information in this
year’s survey and these results are derived from the direct GVA and employment estimates, taking into account the industry-by-industry
distribution of income and jobs, official data on tax-to-income and tax-to-spending ratios, and features of the UK tax system in 2018-19.The Big Business of Small Business
We estimate that £1 billion Fig. 11: Total economic impact of Funding Circle in the UK, 2018
spent by SMEs on purchases
£ billion per annum Headcount, thousands
from other firms was
supported by the loans under 4.5 80
£4.1 billion 71,900 jobs
Funding Circle management 4.0 Induced
70
at the end of 2018. Of this
3.5 1.3 Indirect 20,800
amount, some 80 percent 60
was received by UK-based 3.0 Direct
suppliers, which in turn 50
supported £610 million of GDP 2.5 0.6 11,800
in UK-based supply chains— 40
2.0
the indirect impact of the
30
loans. Based on the industry- 1.5
by-industry distribution of 2.2 £1.0 billion 39,200
20
that GDP, we estimate that 1.0 0.4
it supported a further 11,800 0.1 10
0.5
UK jobs, and an additional 0.6
£120 million in tax revenues. 0.0 0
GDP Tax Jobs
(left scale) (left scale) (right scale)
In addition, spending by
Funding Circle clients’ Source: Oxford Economics. Note: totals may not sum due to rounding.
employees and by workers
in their supply chains is We find that 71,900 jobs were a change in the mix of clients
estimated to stimulate an supported by these loans, by type and size of business,
extra £1.3 billion of UK GDP— and that the associated tax a shift in the lending profile
the induced impact of the revenues were worth £1 billion. towards more capital efficient
loans.20 This is associated with The overall employment impact firms, or (most likely) some
a further employment impact is about the same as the combination of the two.
of 20,800 jobs, and a tax number of people employed In part, this may reflect an
contribution of £360 million.21 in Cheltenham, while the tax increase in repeat business,
revenues would be sufficient to as firms use their loans to
Combining all three fund 31,500 full-time nurses for become more productive.
channels, we calculate that a year.
the loans under Funding The increase in the total GDP
Circle management at the Funding Circle’s contribution contribution in turn supported
end of 2018 supported a to UK GDP in 2018 is more further increases in the total
total contribution to UK than 74 percent larger employment and total tax
GDP of £4.1 billion (see than a year earlier, when impacts enabled by Funding
Fig. 11).22 This is similar to it was calculated to have Circle.
the total value of goods and contributed £2.4 billion
services produced annually (see Fig. 12). Over the same
in each of the local authority period, the value of UK loans
areas of Norwich, Stratford- managed by Funding Circle
upon-Avon, Bath, and grew by 55 percent. The
North‑East Somerset. additional growth in its year-
on-year GDP contribution
is driven by an improved
revenue performance by its
businesses. This could reflect
20
In the UK, loans under management do not include loans to property developers, following Funding Circle’s decision in 2017 to no
longer facilitate this type of finance.
24 21
The induced tax contribution includes all taxes, such as VAT and excise duties, levied on the consumer spending of the workers, as
well as taxes levied on businesses, and on workers’ income, in the induced channel.
22
This amount only reflects the contribution of finance outstanding at that particular point in time, and ignores any ongoing impact
related to Funding Circle loans granted in the past but repaid in the interim.The Big Business of Small Business
Fig. 12: Annual growth in loans through Funding Circle, and the economic activity they support,
between 2017 and 2018
Percentage growth
80%
70% 74%
60%
61%
50% 55%
40%
42%
30%
20%
10%
0%
Loan under management Annual GDP impact Annual tax impact Jobs impact
at year end
Source: Oxford Economics
2.4 WHY DO SMALL BUSINESSES USE FUNDING CIRCLE?
According to our survey of respondents, with purchase
Funding Circle’s UK clients, of new equipment (17 percent),
many of the SMEs want a new product launch or
the finance to provide development, and workforce
them with working expansion (both nine percent)
capital.23 This motivation seen as the next most
was cited by 44 percent of important reasons (Fig. 13).
Fig. 13: Main reason for seeking finance for the business
Working capital 44%
New equipment/machinery 17%
Launch/develop a new product 9%
Increase headcount 9%
Buy more stock 5%
Move to a larger premise 4%
Seasonal liquidity 4%
Marketing 2%
Expand overseas or exporting 2%
Other 3%
0% 10% 20% 30% 40% 50%
Source: Funding Circle survey Percentage of responses
To identify why small UK firms choose to borrow through Funding Circle, a survey of its customers was carried out in January and
23
February 2019. 25The Big Business of Small Business
Fig. 14: Main reason for borrowing from Funding Circle
Fast process 27%
Simple loan application 27%
Good customer service 11%
Competitive interest rate 10%
Better terms 6%
Only option for an unsecured loan 5%
Mistrust of banks 4%
Rejected for a loan by banks 4%
Lower fees 2%
Sense of community 1%
Other 2%
0% 05% 10% 15% 20% 25% 30%
Source: Funding Circle survey Percentage of responses
Small firms in the UK continue Fig. 15: Reasons for not completing a bank loan application
to be attracted by the speed
Percentage of reponses
and ease of Funding Circle’s
loan application process. Of 1%
the whole sample of 445 firms,
27 percent said the most
10% Bank's process was too
important reason for borrowing
from Funding Circle was the difficult or complicated
fast process, while an identical Application rejected
share were most attracted by 18% 38%
by bank
the simple nature of the loan
application process (Fig. 14). Bank took too long
Funding Circle’s clients are
Bank's rates and fees
deterred from borrowing from were too high
the banks by their negative
experiences or perceptions. Other
Some 38 percent did not 33%
complete the application
process as they thought it too
Source: Funding Circle survey
difficult or complicated (see
Fig. 15). A further 18 percent
perceived it would take too
long, while 10 percent were
deterred by the high interest
rates and fees.
26The Big Business of Small Business
The majority of surveyed Fig. 16: Reasons for not approaching a bank first
clients had not approached
Percentage of reponses
a bank before applying to
Funding Circle. Of these
respondents, 66 percent The decision would
2% 11% have taken too long/
believed that a bank’s decision
too much hassle
would have taken too long
or caused too much hassle 6% Thought it would be
(see Fig. 16). Others cited the too expensive
potential expense (15 percent),
and an expectation that their
Thought I would
application would be rejected 15% be rejected
(six percent).
66% Didn't know how to
A significant proportion
approach a bank for
of firms surveyed thought the finance I needed
they were unlikely to obtain
finance in the absence of Other
Funding Circle, leading to
negative consequences. Source: Funding Circle survey
While just over half stated
they would have been likely
or very likely to obtain the
finance they required had
Funding Circle not existed,
a fairly significant 17 percent
of the entire sample felt they
were unlikely or very unlikely
to have obtained finance in
Funding Circle’s absence.
27The Big Business of Small Business
CASE STUDY:
KATE LESTER INTERIORS
A business major from the University of Kate ended up securing her loan just 11 days
Southern California, Kate Lester launched her after applying with Funding Circle. “Time is
luxury interior design firm back in 2010—“from something that’s super-valuable to me,” she
my guest room, with $500; no capital, no says, “so if we can get our financing done
investors. I’m a firm believer that businesses efficiently, I don’t have any issue with paying
should start slowly and grow slowly; don’t bite a premium for that. For me to go to a bank,
off more than you can chew.” and maybe get one or two points difference in
the interest rate, wasn’t worth all the back and
So initially, growth of Kate Lester Interiors forth it would have required.”
came largely by word of mouth. “One fabulous
client told another fabulous client, and it sort of Similarly, she contrasts the “eight hours I spent
expanded ...” on the phone with my bank, just trying to get
someone to talk to me” with her experience
But this slow-and-steady approach changed with Funding Circle. “Jackie was our one
when a “perfect new space” suddenly became contact person at Funding Circle, and she
available on the Pacific Coast Highway, allowing knew everything about our loan and where it
Kate to open her first storefront. was in the process. We didn’t have to talk to 10
different people—so that was a huge benefit for
“My bookkeeper said to me, ‘Getting financing me.”
isn’t a bad thing. You’re going to pay it back;
you just need a little help right now to build Five months after securing the loan in March
out the space, hire some people, and do a little 2017, Kate opened her new retail space on the
marketing.’” Pacific Coast Highway. Since then business has
boomed, and she is now focusing on the next
At first, Kate approached her bank for funding phase of her long-term plan: building her team
“because we already had so much in-and-out and brand, while helping each client create
cash flow with them”. They turned her down. spaces that are “luxurious, livable, and unique”.
On the very same day, however, she received
a promotional mailer from Funding Circle and
decided to apply.
28The Big Business of Small Business
29The Big Business of Small Business
3. UNITED STATES
3.1 SMALL BUSINESSES’ ACCESS TO FINANCE
During 2018, the US economy Fig. 17: Senior Loan Officer Survey on how banks’ credit
achieved its second-longest standards for approving applications have changed over the
continual expansion on past three months
record, having experienced
Percentage balance
unbroken growth since June
2009. Over the year, the US 20%
Large firms Small firms
economy grew by 2.9 percent,
15%
Tightening
supported by strong growth
in consumer spending and 10%
resilient business activity.
5%
0%
While bank lending to commercial
and industrial customers is -5%
increasing in the US, small
businesses are being left out. -10%
Easing
-15%
And yet, while bank lending -20%
to commercial and industrial
(C&I) customers is increasing, -25%
small businesses are being left 2010 2011 2012 2013 2014 2015 2016 2017 2018
out. According to the Federal Source: Federal Reserve
Reserve’s latest Senior Loan
Officer Survey, more banks
relaxed their standards for The Senior Loan Officer Looking specifically at the
C&I loans to large and middle- Survey also suggests the value of bank lending to small
market firms than to small banks were disadvantaging C&I customers, the pattern
firms in 2018. On average a their small corporate of demand for, and supply
net balance of 13.3 percent of customers in how they of, bank loans for different-
respondents reported easing changed the terms and sized companies is quite
their credit standards on loans conditions on loans in 2018. complicated. But the most
to large and medium firms An average net balance of rapid growth in each of the
in 2018, while the equivalent 24.7 percent of banks eased last three years has occurred
figure was just 3.1 percent for the interest rate spreads they in the total value of credit
loans to small firms. charged on loans to medium under $100,000 (including
and large firms, compared business credit cards) and
with just 13.9 percent for small loans over $1 million (Fig. 18).
An average net balance of firms. Similarly, a larger net
24.7 percent of banks eased balance of banks eased the
their interest rate spreads to collateral requirements and
medium and large firms in 2018, covenants for medium and
compared with just 13.9 percent large firms than they did for
for small firms. small firms in 2018.
30The Big Business of Small Business
Fig. 18: Annual growth in the value of bank lending to C&I customers in the US, split by loan size
9%
Less than $100K Between $100K-$250K
8% 8.5%
Between $250K-$1 million Over $1 million
7% 7.2%
6%
5.6% 5.8%
5% 5.4%
4.7%
4% 4.2%
3% 3.3%
2.7%
2%
1.9% 1.8%
1% 1.4%
0%
2016 2017 2018Q1-Q3
Source: FDIC
The size of loan that a The latest Small Business Larger SMEs are more likely
firm applies for is heavily Credit Survey suggests to seek external finance:
correlated with its size. there is a strong appetite for according to the SBCS, the
According to the latest external finance among SMEs. proportion of small businesses
Small Business Credit Survey This continues to reflect their applying for external finance
(SBCS), some 69 percent desire to expand (a 2018 survey over the past 12 months ranged
of the loans applied for by the National Federation of from 35 percent of firms
by firms with one-to-four Independent Business found with one-to-four employees,
employees, and 57 percent that 60 percent of small firms up to 51 percent of firms
of those by firms with five- had made a capital expenditure with between 50 and 499
to-nine employees, are under in the previous six months). employees (Fig. 19).
$100,000.24 In addition, 43
percent of loans applied Fig. 19: Share of SMEs that applied for financing in previous
for by firms with 50–499 12 months
employees are over $1 million. 60%
Following our earlier analysis,
this suggests the US’s 50%
smallest firms, and also some 50% 51%
46%
medium-sized firms, have 40% 44%
been particularly successful
in increasing the value of the 30% 35%
loans they obtained between
2016 and 2018 Q3. 20%
10%
0%
1-4 5-9 10-19 20-49 50-499
employees employees employees employees employees
Source: Small Business Credit Survey 2017
24
The SBCS is the most comprehensive survey of its kind in the US, carried out nationally by the 12 Federal Reserve banks. It collates
information on small business financing needs, decisions, and outcomes. For the purposes of this survey, ‘small businesses’ include all
firms with fewer than 500 employees. 31The Big Business of Small Business
However, small US businesses Fig. 20: Firms reporting credit availability as ‘a challenge’, by
continue to report difficulty firm employee size-band
in accessing credit, with Percentage share of firms
the smallest firms facing
the most severe difficulties. 35%
Some 32 percent of firms
30% 32%
with between one and
nine employees reported 29%
25% 27%
experiencing challenges
obtaining credit over the 20%
previous year. This figure
15% 18%
drops to 18 percent for SMEs
with over 50 employees.
10%
These difficulties echo the 5%
share of small businesses that
have their credit applications 0%
1-9 10-19 20-49 50-499
rejected, or obtain only a
employees employees employees employees
proportion of the external
finance they seek. The SBCS Source: Small Business Credit Survey
shows that smaller firms are
much more likely to have their insufficient credit histories for loans either got rejected or did
applications rejected—just as younger firms, and their lack not obtain all the finance they
they are more likely to receive of assets to offer as collateral. sought (see Fig. 22). In all, 22
only part of the loan they percent of loans of this size
requested (see Fig. 21). In part, When looking at outcomes were rejected, the highest of
this reflects the difficulties based on loan size, SMEs all rejection rates. The “funding
lenders have in judging smaller applying for credit of between gaps” for loans of less than
businesses’ credit risk, due to $25,000 and $250,000 face $25,000 and over $250,000
a combination of the lack of the most difficulties. Some were broadly similar, at 46 and
publicly available information, 58 percent applying for such 47 percent, respectively.
Fig. 21: Outcome of small businesses’ finance applications, by firm employee size-band, 2017
Percent of total
80%
None Partial amount requested Full amount requested
70%
70%
60%
58% 58%
50%
47%
40%
30% 36% 38%
33%
27% 29%
26%
20%
20% 21%
10% 15% 13%
9%
0%
1-4 employees 5-9 employees 10-19 employees 20-49 employees 50-499 employees
Source: Small Business Credit Survey
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