Barclays launches £100,000 unsecured lending, as new research shows the value of faster finance to SMEs
- Tens of thousands of businesses could benefit immediately as Barclays doubles unsecured lending limit from £50,000 to £100,000
- Nearly a quarter (23%) of business owners surveyed said they would create jobs if given a £100,000 loan
- Being unable to access loans quickly enough means nearly one in five (18%) SMEs that have taken a bank loan have lost out
Barclays has today launched £100,000 unsecured lending – doubling its maximum for unsecured business loans for small and medium-sized enterprises (SMEs) from £50,000 to £100,000.
The bank has also identified more than 40,000 SME clients, from dentists to manufacturers, that could be eligible for the higher levels of lending, which because it is unsecured could be in their accounts within days.
The move will help SMEs get faster access to finance and seize opportunities they might otherwise miss out on if lending decisions are not made quickly enough. It also means business owners will not have to use their business premises or home as security.
The expansion of unsecured lending adds to Barclays' already class-leading unsecured lending offering, whereby 250,000 Barclays SME clients can see pre-assessed lending limits of up to £25,000 via mobile and online banking, which they can apply for digitally, often receiving the cash that day. It is more than 40,000 of these businesses that have been identified as eligible to apply for up to £100,000.
New research today also highlights the importance of access to finance. Barclays’ survey of more than 1,100 SME business owners shows just how vital speed is in today’s environment, with almost one in five (18%) of those surveyed that have used a bank loan (and 9% overall) saying they have lost out in the past because they could not get a loan or funding fast enough.
The research also found that over one in ten (11%) of surveyed business owners said they’d be more likely to apply for a loan if they could get a decision within 24 hours, while 16% of those that have used a bank loan (and 9% overall) said the time it takes to get a loan puts them off applying.
The respondents were also hesitant to offer their home as security, with almost half (47%) saying they would be deterred from taking a substantial loan out against their home, and nearly one in three (31%) saying they would rather pay a slightly higher interest rate than have to use their home as security.
Unsecured lending differs from lending where the loan is secured against assets such as a business premises or the owner’s home. It is far faster for firms as it does not require land or property valuations and other steps that slow the process down. Applicants for Barclays unsecured lending will typically be able to get a decision within 24 hours, and have the money in their account within five working days.
The additional lending could not just help individual companies, but also boost the wider economy. For example, nearly a quarter (23%) of business owners surveyed said that if they were given a £100,000 loan, they would hire more staff.
Ian Rand, Chief Executive of Barclays Business Banking, says: “Many people think taking a business loan is stressful, or are put off by the perceived bureaucracy and time involved. At Barclays, we are tackling this head-on, making small business lending faster, simpler and easier.
“Importantly, a business loan is a type of finance that can really transform a brilliant, hard-working company, allowing it to scale up and serve more people. Removing barriers to such investment is good for firms across the country, and for the economy.
“Furthermore, speed of access to finance can be vital in today’s environment. Business moves very fast, and firms can access larger opportunities at short notice thanks to digital communication.
"Unsecured lending can also be particularly useful for certain types of business. This includes nimble firms that achieve high growth rates without owning premises that would serve as security for a loan, or those led by young entrepreneurs who have a successful business but are yet to buy a home that could serve as security.”
Both the pre-assessed lending up to £25,000 and the expansion of unsecured lending can make taking a business loan easier – an important benefit for business owners. In the survey, more than one in ten respondents overall (13%), and approximately a quarter (24%) that have used a bank loan, said applying for a business loan is more stressful than getting married or buying a home.
In addition, Barclays is increasing the maximum unsecured overdraft for business lending from £25,000 to £50,000, helping firms take on larger projects or deal with unexpected increases in business, for example.
When Barclays asked small businesses what they would do with £100,000 of business lending, the top five answers were:
- Purchase new equipment or machinery: 34%
- Improve or increase branding/marketing: 32%
- Diversify the business (e.g. open in a new market; add a product/service): 31%
- Hire more staff: 23%
- Get new premises :14%
Unsecured lending is not available for all industries and is subject to normal lending assessment, status and application. Terms and conditions apply.
To ensure Barclays’ lending to the country’s SMEs remains responsible, actual amounts available to firms will be determined by factors including their track record and credit score, and a business case for the financing. For certain firms, a personal guarantee may be required – a legally binding agreement that allows someone to be personally liable for the obligations of the borrower. For example, an individual director may guarantee a limited company’s loan.
Pre-assessed limits refer to lending that eligible clients could potentially access subject to applicable credit checks as per Barclays terms and conditions.
For further detail on the unsecured lending, see: https://www.barclays.co.uk/business-banking/borrow/loans/
For further detail on the unsecured overdraft, see: https://www.barclays.co.uk/business-banking/borrow/overdrafts/
All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 1,168 UK business owners of private SME businesses. Fieldwork was undertaken between 18th - 30th June 2018. The survey was carried out online.