UK finance brokers’ deals collapse in March as small businesses confidence wanes

Graham Hill, founder of GHA Finance, explained: “UK brokers are clearly struggling as a result of the pandemic restrictions. Access to two principal sources of business – motor dealers and leasing and finance companies – is currently severely restricted. This has led to a significant drop in enquiries from customers, difficulties in obtaining finance quotations and obtaining vehicle delivery dates.”

Hill added that the supply of vehicles is already restricted since OEMs are “manufacturing for order – not for stock”.

As a result of the extreme strictures faced by brokers, the National Association of Commercial Finance Brokers (NACFB) has announced free membership for all existing brokers for the next four months. To provide an immediate and direct lifeline for brokers, the Association will not be running direct debits for membership fees, nor will it seek to latterly accrue payment.

NACFB Chair Paul Goodman said: “We know that the recent announcements from the chancellor won’t go far enough to impact most of our membership. We have therefore made the right decision to pause the collection of all existing broker membership fees – a far more substantial measure than any three-month holiday period. We want our loyal members to be able to lean on their trade body during this difficult time and feel supported, not just in terms of our service, but financially too.”

As a result no membership fee direct debits will be made for any existing NACFB brokerage for the next four months, from April until July 2020.

Small business growth outlook collapses

Meanwhile “bleak new data” from Hitachi Capital Business Finance reveals that the proportion of UK small businesses predicting growth has plummeted from 39% to just 14% in the last three months – with 31% of business owners scaling back their businesses and 30% saying they will struggle to survive between now and the end of June.

Since Hitachi Capital commenced its quarterly tracking of small business outlook in 2015 the proportion of small businesses predicting growth for the next three months has remained remarkably resilient, consistently standing at between 34%-39% over the last seven consecutive quarters.

The new data, however, reveals the scale of the impact that the Covid-19 pandemic has had on the sector.

The industry sectors where small business owners most feared collapse were Hospitality and Leisure (50%), Retail (40%) and Transport/distribution (37%). For the first time, every industry sector recorded more business leaders predicting contraction or collapse than growth for the next three months.

Reflecting on their current trading status since the outbreak of Covid-19 in the UK, 32% of small businesses have temporarily closed, with just 1% so far closing permanently. Further, 34% have adjusted to a home working regime, 12% have transitioned to become online businesses and 4% have diversified their services in order to stay afloat. Around one in seven (13%) reported no change to their trading status.

By sector, small businesses in Hospitality (73%) and Construction (47%) were most likely to have temporarily closed. Retail was the sector where small businesses were most likely to have gone online (24%) – whilst IT (53%), Media (51%) and Legal (50%) were the sectors where home working has been most widely adopted.

Gavin Wraith-Carter, managing director at Hitachi Capital Business Finance (pictured above), stressed: “The small business outlook in recent years has at times defied gravity. Through the uncertain periods of the Brexit era, the Scottish Referendum and various UK General Elections, our study has shown small business outlook to be stoic and positive.

“The current climate though has brought a sudden and seismic shift in confidence and outlook. Many small businesses have been unable to trade and many have to revise growth forecasts as the whole supply chain has been shaken by the current period of lockdown.”

Brokers to lobby government

Meanwhile representatives from the NACFB executive are to host an urgent meeting with the Bank of England’s Agent for London, Robert Elder, to gather the latest intelligence and share with the Bank the role commercial brokers can play in responding to the outbreak.

The meeting is timely as it follows news from the chancellor that the Treasury has substantially increased its response package that focuses on subsidised loans and direct cash payments to UK firms, particularly in the hospitality and leisure industry.

Elsewhere, the NACFB has tripled all paid-for online advertising spend for its findSMEfinance platform, part of a proactive campaign that seeks to enhance national awareness of the Association’s brokers, positioning them as a lifeline for coronavirus-stricken small businesses.

The findSMEfinance platform has also undergone a brand refresh in a further attempt to increase visibility. Since its launch last February, nearly 400 NACFB brokers have signed up to the lead generation platform. The free broker directory enables UK businesses seeking finance to simply filter their funding requirements by loan size, type and location and is then presented with a range of the Association’s commercial brokers to approach. All full NACFB Members that hold FCA authorisation are eligible to sign-up and can do so in minutes.