Neutral sentiment dominates among commercial finance intermediaries as clients weigh investment plans
Confidence in the trajectory of the UK economy over the next year is finely balanced among commercial finance brokers, according to new research from SME funder Asset Advantage.
A survey of commercial brokers across the country found that 49% described their outlook for the next 12 months as neutral, while 28% said they were pessimistic about economic prospects. A little over one in five respondents reported feeling optimistic about the year ahead, underlining a split in sentiment as firms consider investment against a backdrop of market and economic uncertainty.
Brokers highlighted several factors as weighing on the outlook, including the impact of government taxation, fragile business confidence, higher operating costs and ongoing inflationary pressures.
One broker pointed to “cashflow and uncertainty” as the main concerns, saying: “Decisions are taking longer as businesses feel the pinch and have to be careful with additional investment.” Another broker added: “Inflationary pressures mean businesses make lower profit which in turn affects their serviceability and ability to borrow.”
Despite these headwinds, Asset Advantage’s separate research indicated that brokers remain broadly upbeat about their own pipelines over the coming year. Respondents anticipated firm demand from small and medium-sized enterprises for both asset finance and funding for business acquisitions.
Gary Thompson (pictured right), sales director at Asset Advantage, said: “While there’s still very much strong demand for business funding, there’s no doubt that many businesses are feeling cautious in the current climate.
“Big factors such as higher operational costs, inflationary pressures and both geopolitical and economic uncertainty all continue to have an impact on business confidence and influence borrowing and investment decisions.
“Against this backdrop, the case for flexible funding options from pragmatic and forward-thinking funders becomes ever clearer. Working with expert commercial brokers, specialist funders who are willing to support complex, growth-focused deals will be key to giving SMEs the confidence they need to push ahead with their expansion plans.
“Brokers play a critical role in fostering confidence among their clients and demonstrating what is possible. To ensure they can continue doing this, they need the support of specialist funders and providers.”
For mortgage professionals active in the commercial and SME sectors, the findings suggest that clients may continue to approach borrowing decisions cautiously, even where underlying demand for funding remains solid.
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