SME Finance Monitor. Current analysis 3 months to end June An independent report by BDRC, July 2018

Transcription

1 SME Finance Monitor Current analysis 3 months to end June An independent report by BDRC, July

2 Introduction The SME Finance Monitor was established in 2011 and provides detailed analysis of SMEs and their access to finance on a half yearly basis. The latest full report (YEQ4 2017) was published on March 15 th and the Q2 report will be available in mid- September. As fieldwork takes place on a continuous basis, it is also possible to provide headline data on key issues in between these full reports. This pack will therefore be provided on a monthly basis and provide the latest 3 months rolling data across a range of issues. The most recent data point for this report is the 3 months from April to June. Headline analysis is provided for all SMEs, with key questions split by size of SME. Some analysis is also provided by the type of international trade (if any) undertaken alongside domestic activity: Exporting but no importing (labelled as export only ) Importing but no exporting (labelled as import only) Both importing and exporting (labelled as import & export ) No international trade, SME only trades domestically (labelled as domestic sales only ) Differences shown month on month are not necessarily statistically significant. Differences of 4%+ month on month are needed for the total sample and up to 10%+ for some of the smaller groups (such as those trading internationally).

3 Introduction Changes to main SME Finance Monitor questionnaire for The SME Finance Monitor questionnaire has evolved gradually since it started in In Q it was decided that a more radical review was required to reflect changes in the finance market for SMEs, such as the rise of online platforms and other non-bank suppliers of finance. This was also an opportunity to focus on need for finance and how this translates into applications. However, there have been slight changes to the types of finance used question and also to the definition of a Permanent non- Borrower. These initial results do not suggest the changes have had a major impact on results but will be monitored over time. All of the changes will be reported on in full in the Q2 SME Finance Monitor report, due to be published in September Most of the questions reported in this pack have remained unchanged.

4 Use of external finance in to date is somewhat lower than in 2017, with the exception of those with employees, but appears to have stabilised Time series: use of external finance per quarter emps emps 73% 70% 85% 1-9 emps 0 emps 58% 38% 53% 40% 32% All SMEs 44% 41% 37% 37% 33% 36% 35% 46% 36% 40% 38% 39% 34% 33% 31% 35% Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 3m Apr 3m May 3m June In 2017 as a whole, 38% of SMEs were using external finance, increasing by size of SME to 73% of those with employees. Use of finance in has been somewhat lower with around a third of SMEs using finance (but 35% in the current period). The decline since Q has been seen in particular across those with 1-49 employees. Q15 Base : All respondents 3m June: /1450/1450/700

5 Use of finance amongst those who export only remains volatile and back to lower levels seen in Q Time series: use of external finance by extent of international trade alongside domestic sales Export only Import only Import Uy-& export Domestic sales only 66% 51% 47% 48% 45% 43% 43% 35% 32% 41% 31% 34% 57% 42% 33% 32% 55% 54% 45% 44% 47% 44% 35% 34% 53% 51% 47% 46% 48% 39% 38% 40% 39% 38% 37% 57% 54% 46% 43% 39% 41% 39% 34% 32% 32% 31% 30% 43% 39% 34% 24% 24% 2015 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 3m Apr 3m May 3m June Use any external finance Base : All 3mths to June 239/309/299/3653

6 The proportion of Permanent Non-Borrowers remains higher than in 2017 as fewer SMEs use external finance Time series: Permanent non-borrowers and users of external finance 44% 40% 43% 47% 49% 47% 49% 46% 47% 46% 48% 45% 48% 52% 51% 49% Permanent nonborrowers 34% 41% 37% 37% 33% 36% 35% 42% 36% 40% 38% 39% 34% 33% 31% 35% Use any external finance now Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 3m Apr 3m May 3m June The Permanent non-borrowers are firms with no apparent appetite for finance and are defined by not using external finance and showing no inclination to do so. The 3 months to June figure of 49% remains above 2017 (when 47% were PNBs).The gap between the PNBs and those using external finance (as was seen for most of 2016 and 2017) remains wider than in 2017 but does not appear to be continuing to widen. Q15/14 and others Base : All respondents 3m June 4500

7 SMEs that only import remain less likely to be a permanent non-borrower in Time series: Permanent non-borrowers by extent of international trade alongside domestic sales Export only Import only Import Uy-& export Domestic sales only 68% 49% 39% 35% 34% 50% 49% 50% 46% 45% 48% 40% 41% 40% 38% 24% 53% 47% 47% 49% 44% 46% 43% 44% 44% 36% 37% 42% 35% 26% 23% 37% 33% 53% 52% 53% 46% 54% 52% 49% 53% 50% 47% 53% 45% 43% 48% 34% 33% 31% 24% 2015 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 3m Apr 3m May 3m June Base : All 3mths to June 239/309/299/3653 Permanent non-borrowers (no apparent appetite for finance)

8 The proportion of SMEs willing to use finance to grow is stable but remains at lower levels than were seen in 2016 Time series: Agree that willing to use external finance to help business grow Emps No emps 50% 39% 39% 32% All SMEs 45% 44% 42% 44% 42% 34% 32% 35% 34% 32% 34% 35% 34% 2015 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 3m Apr 3m May 3m June After remaining stable during 2016, the proportion of SMEs wiling to use finance to grow was consistently lower from Q onwards, with lower levels of agreement amongst both the 0 employee SMEs and those with employees. Base : All respondents 3m June 4500

9 Over time, domestic and export only SMES have become less likely to be willing to borrow to grow Time series: Agree that happy to use external finance to help business grow Export only Import only Import Uy-& export Domestic sales only 53% 51% 47% 44% 46% 45% 32% 29% 2015 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 3m Apr 3m May 3m June Base : All 3mths to June 239/309/299/3653 Agree that happy to use external finance to grow

10 Since the end of 2016, around 3 in 10 SMEs have injected personal funds. SMEs were as likely to have chosen to do so than to have felt that they had to. Time series: Injections of personal funds in previous 12 months Any injection of funds 43% 38% Felt had to inject funds 25% 20% 29% 27% 30% Chose to 15% 14% inject funds 17% 19% 14% 25% 25% 17% 14% 17% 20% 17% 15% 17% 16% 15% 16% 15% 15% 13% 13% 11% 8% 31% 29% 28% 31% 30% 28% 29% 27% 29% 11% 12% 13% 14% 14% 13% 13% 12% 14% Any injection of funds Chose to inject funds Felt had to inject funds Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 3m Apr 3m May3m June The proportion of SMEs injecting funds fell from a peak of 43% in 2012 to around a quarter of SMEs in mid Since the start of 2017 around 3 in 10 have reported an injection of funds in the 3 months to June SMEs were as likely to have chosen to inject funds as to have felt forced to. Q15d2 Base : All respondents 3m June

11 The proportion of SMEs holding more than 10,000 of credit balances is stable but slightly lower than was seen during Time series: 10k credit balances held 91% emps 77% emps 66% 71% 1-9 emps 32% 38% 0 emps 10% All SMEs 16% 17% 20% 24% 22% 21% 22% 23% 29% 25% 27% 24% 22% 23% 24% 23% 17% Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 3m Apr 3m May 3m June In 2015, 24% of SMEs held 10,000 or more in credit balances. In 2016, 22% held such sums with little change overall during the year, increasing to 25% in 2017 as a whole. Initial data into suggests a somewhat lower percentage, more in line with Q244 Base : All respondents excluding dk/ref 3 mths to June 2535

12 On average SMEs held the equivalent of a quarter of their turnover as credit balances in the latest period, up from a fifth. Time series: % of turnover held as credit balances 0 emps 24% 1-9 emps 22% emps 21% emps 18% 27% 26% 25% 18% All SMEs 23% 21% 24% 25% 27% 21% 21% 22% 22% 21% 20% 24% Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 3m Apr 3m May 3m June New analysis looks at credit balances held as a percentage of total turnover (both collected in bands, with mid-points used). For the 3 months to June, SMEs held 24% of their turnover in credit balances on average, back in line with the second half of Q244 Base : All respondents excluding dk/ref 3 mths to June 2270

13 The proportion of SMEs reporting growth is currently stable overall, with signs of increase for those with employees Time series: Have grown (excluding Starts) 67% emps 54% emps 49% 1-9 emps 43% 0 emps 38% 53% 49% 37% All SMEs 40% 42% 39% 43% 40% 39% 39% 38% 46% 41% 42% 42% 41% 41% 41% Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 3m Apr 3m May 3m June Since 2012, the proportion of SMEs (excluding Starts) reporting growth has varied little over time. It was 40% for 2016 as a whole and 42% for The current overall figures are in line with Q245a Base : All respondents excluding Starts. 3 mths to June 3914

14 Growth ambitions have been stable overall since Q The largest SMEs are more likely to be planning to grow than they were in Time series: Have plans to grow 90% emps emps 1-9 emps 0 emps 67% 59% 54% 46% 67% 59% 43% All SMEs 49% 47% 45% 45% 41% 40% 47% 43% 45% 45% 46% 47% 47% 48% 48% Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 3m Apr 3m May 3m June For 2016 as a whole, 43% of SMEs planned to grow, continuing the slight decline seen since 2013, but there was no further decline in 2017 (45% for the year as a whole). The 3 months to June figure of 48% remains consistent with Q4 2017, but with increased ambition for those with employees (from 67% to 90%). Q225 Base : All respondents 3m June: /1450/1450/700

15 The growth ambitions of international SMEs are higher than domestic SMEs. Export only SMEs have seen more variation in ambition but are now in line with their international peers Time series: Growth plans by extent of international trade alongside domestic sales Export only Import only Import Uy-& export Domestic sales only 74% 62% 41% 70% 71% 66% 62% 63% 59% 59% 54% 48% 52% 42% 38% 38% 75% 69% 45% 41% 69% 67% 66% 65% 66% 61% 67% 58% 52% 41% 41% 40% 71% 68% 66% 66% 64% 65% 62% 60% 62% 60% 52% 52% 56% 56% 57% 43% 46% 46% 45% 44% 2015 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 3m Apr 3m May 3m June Plan to grow in next 12 months Base : All 3mths to June 239/309/299/3653

16 Levels of concern around the current economic climate and political uncertainty remain fairly stable in, but are somewhat higher than they were at the start of 2017 Time series: 8-10 Major obstacle to running business in next 12 months The current 34% economic climate 27% Political uncertainty 17% 13% 13% 13% 10% 10% 10% 10% 10% 13% 13% 14% 13% 11% 13% 16% 14% 15% 16% 15% 15% 15% 14% 16% 15% 15% 15% Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 3m Apr 3m May 3m June During 2017, concerns about political uncertainty remained fairly stable (13-15%) at a slightly higher level than in 2016 and increased again in early. Concerns about the economic climate increased in 2017 from 11% in Q1 to 16% in Q3 and have been broadly stable since. Q227 Barriers to running business as would want in next 12 months Base : All respondents 3m to June 4500

17 SMEs with 1-9 employees remain somewhat more concerned about the economic climate and political uncertainty; larger SMEs concerns appear to be abating Time series: % Rating The economic climate and Political uncertainty/govt policy 8-10 a major obstacle for next 12 months Economic climate Political uncertainty 13% 12% 13% 16% 15% 15% 15% 14% 14% 17% 18% 17% 17% 18% 9% 10% 13% 16% 13% 14% 15% 12% 13% 16% 16% 16% 16% 16% 2015 Q1 18 3m Apr 3m May 3m June 2015 Q1 18 3m Apr 3m May 3m June 0 emps 1-9 emps 15% 15% 14% 16% 16% 13% 12% 14% 13% 13% 8% 14% 14% 14% 13% 14% 7% 5% 12% 13% 14% 6% 9% 8% 11% 7% 5% 4% 2015 Q118 3m Apr 3m May 3m June 2015 Q118 3m Apr 3m May 3m June Q227a Base : All emps emps

18 SMEs that import are more concerned about the economic climate than those who only export or domestic SMEs Time series: 8-10 economic climate by extent of international trade alongside domestic sales Export only Import only Import Uy-& export Domestic sales only 34% 18% 15% 13% 12% 13% 13% 10% 9% 20% 19% 18% 19% 13% 14% 12% 9% 30% 26% 22% 22% 18% 24% 19% 19% 19% 14% 15% 10% 11% 11% 11% 29% 29% 24% 26% 22% 24% 21% 20% 22% 20% 22% 16% 15% 15% 15% 14% 14% 12% 12% 2015 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 3m Apr 3m May 3m June Rating the current economic climate a major obstacle (8-10) Base : All 3mths to June 239/309/299/3653

19 SMEs that import are also more concerned about political uncertainty than export only or domestic SMEs Time series: 8-10 political uncertainty by extent of international trade alongside domestic sales Export only Import only Import Uy-& export Domestic sales only 11% 10% 10% 10% 19% 14% 10% 10% 9% 7% 7% 7% 34% 31% 29% 26% 25% 21% 22% 26% 21% 20% 22% 20% 16% 15% 19% 19% 15% 12% 9% 11% 12% 12% 12% 13% 30% 24% 21% 23% 20% 18% 15% 13% 31% 24% 13% 12% 28% 22% 16% 14% 2015 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 3m Apr 3m May 3m June Base : All 3mths to June 239/309/299/3653 Rating political uncertainty a major obstacle (8-10)

20 Most SMEs are Future happy non-seekers. Potential appetite for finance is stable, at levels seen in the first half of 2017 Time series: Anticipated borrowing profile for next 3 months after Have plans to apply/renew Would be seekers - with need Would be seekers no need Happy non-seekers 14% 14% 13% 13% 14% 11% 11% 11% 10% 12% 12% 14% 9% 9% 9% 9% 3% 2% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 20% 16% 14% 10% 11% 12% 11% 13% 10% 9% 8% 1% 10% 14% 10% 11% 11% 63% 68% 71% 76% 74% 76% 77% 75% 79% 79% 79% 75% 76% 79% 79% 79% Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 3m Apr 3m May 3m June Each quarter, the majority of SMEs have expected to be Future happy non-seekers of finance. The proportion of HNS has increased over time, conversely, the proportion of Future would-be seekers who could see a barrier that would stop them applying for finance, reached a low around Q of 9% and has since risen somewhat. The proportion of SMEs with any potential appetite for finance (planning to apply or a future would-be seeker ) rose steadily over the last year, to 24% in Q1 but is somewhat lower in the current period (21%) Q229 Base : All respondents 3m to June 4500

21 Future appetite for finance is lower in than in It is currently fairly stable for all SMEs Time series: % planning to apply Plan to apply 12% 11% 11% 8% 9% 8% 7% 17% 15% 15% 12% 12% 12% 13% 2015 Q1 18 3m Apr 3m May 3m June 2015 Q1 18 3m Apr 3m May 3m June 0 emps 1-9 emps 19% 16% 16% 14% 13% 14% 15% 14% 13% 17% 14% 12% 10% 11% 2015 Q1 18 3m Apr 3m May 3m June 2015 Q1 18 3m Apr 3m May 3m June emps emps Futfin Base : All

22 Appetite for external finance declined sharply amongst international SMEs in early, but has increased again for SMEs that import and export Time series: plan to apply for finance by extent of international trade alongside domestic sales Plan to apply for external finance Export only Import only Import Uy-& export 22% 19% 19% 12% 26% 18% 13% 24% 31% 22% 19% 21% 18% 10% 19% 16% 20% 11% 11% 17% 18% 13% 9% 10% 21% 12% 18% 29% 23% 18% 13% 8% 11% 11% 13% 10% 14% 9% 4% 10% Domestic sales only 24% 21% 20% 11% 10% 12% 10% 9% 8% 8% 8% 8% 2015 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 3m Apr 3m May 3m June Appetite for finance amongst those that both import and export has varied over time. It fell sharply from the recent peak of 29% in the 3 months to December 2017 to 10% in Q1 but is currently back to 21%. Base : All 3mths to June 239/309/299/3653

23 Those who only import remain more likely to be a future would be seeker of finance as the proportion of this group planning to apply* remains lower than previously seen Time series: future would be seekers by extent of international trade alongside domestic sales Export only Import only Import Uy- & export Domestic sales only Expect to be a future would-be seeker of finance 23% 25% 12% 12% 11% 10% 11% 11% 10% 4% 16% 14% 13% 11% 11% 6% 8% 3% 14% 13% 7% 12% 8% 7% 7% 16% 15% 11% 9% 10% 9% 9% 8% 16% 13% 11% 7% 15% 10% 12% 21% 18% 12% 12% 11% 8% 6% 4% 20% 14% 12% 4% 2015 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 3m Apr 3m May 3m June Would-be seekers of finance are those who can see a barrier to them making an application for loan or overdraft finance in future, such as the current economic climate or a belief that they would not be successful if they applied. Those who only import remained more likely to expect to be a would-be seeker of finance, replicating a pattern seen at the end of * See previous slide, for planning to apply * SEE PREVIOUS SLIDE Base : All 3mths to June 239/309/299/3653

24 Confidence amongst SMEs planning to apply for bank finance has been volatile since the end of 2017, due to changing confidence amongst potential applicants with 0-9 employees Time series: Confidence (very/fairly) bank will agree to facility next 3 months by size emps 0-9 emps 58% 60% 41% 37% 66% 46% 70% 52% 73% 74% 47% 51% 81% 74% 60% 59% 66% 49% 79% 78% 53% 57% 65% 67% 40% 46% 72% 71% 71% 57% 41% 44% 42% 39% 47% 53% 48% 53% 62% 60% 50% 55% 58% 41% 48% 43% 46% 58% Overall Confidence Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 3m Apr 3m May 3m June During 2017 confidence was somewhat lower and more volatile (it was 50% for the year as a whole compared to 55% in 2016). In, overall confidence declined to 43% for the 3 months to April but has improved since to 58% in the current period, back in line with Q3 2017, boosted by higher levels of confidence amongst smaller potential applicants. Q238 Base : All planning to apply for new/renewed facilities 3mths June /204

25 Confidence for hypothetical applicants is back to levels seen in 2017 and remains slightly ahead of those with plans to apply Time series: Confidence (very/fairly) bank would agree to facility next 3 months by size emps 0-9 emps 80% 82% 84% 80% 80% 81% 82% 78% 67% 68% 64% 64% 60% 61% 62% 60% 73% 54% 78% 79% 80% 57% 60% 60% 61% 65% 67% 69% 65% 62% 62% 61% 55% 58% 61% 61% Overall Confidence Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 3m Apr 3m May 3m June 2016 Around 6 in 10 (61%) of those with no plans to apply to a bank for finance are confident of a hypothetical success. Larger hypothetical applicants remain somewhat more confident than smaller ones, and their confidence has increased to 80% in the latest period after previous declines. Confidence amongst smaller hypothetical applicants has improved slightly to 60%%. Hypothetical applicants remain somewhat more confident than those planning to apply (see previous slide for those with plans) that the bank would say yes. Q239b Base : All not planning to apply for new/renewed facilities 3m June /

26 The proportion of SMEs that export has been broadly stable since the start of 2017 Time series: Exporters emps 34% emps 21% 1-9 emps 9% 0 emps 5% All SMEs 6% 8% 10% 10% 10% 9% 7% 7% 11% 10% 11% 9% 9% 9% 9% 9% 21% 17% 11% 7% Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 3m Apr3m May 3m June The proportion of exporters increased from 6% in 2012 to 10% in 2014 and In 2016, the proportion exporting was slightly lower (8%), but was back to 10% for It has been 9% consistently in to date. Q223 Base : All respondents 3m June: /1450/1450/700

27 Quality Standards and Other Details BDRC is certified to ISO and 27001, the recognised international quality standards for market research and information security. Adherence to the standard is independently audited once per year. Where subcontractors are used by BDRC, they are assessed to ensure any outsourced parts of the research are conducted in adherence to ISO and All work will be carried out in conformity to these standards, the MRS Code of Conduct, and all relevant legal requirements 27

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