Accredo: Supporting the growing wave of UK start-ups

The appeal of starting a new business has always been strong in the UK and this year 3 in 5 Brits express the desire take that leap.

According to GOV.UK, there are already 5.51 million small businesses in the UK. Reportedly, small and medium-sized enterprises (SMEs) generated almost £2.4 trillion in turnover in 2023, which represented more than half (53%) of the total turnover generated from private sector businesses.

It is evident that the appetite for entrepreneurship is strong in the UK, but navigating financing for SME’s can be difficult. Accredo have solutions that can support your clients and their business aspirations.   

Perceived barriers to funding

Financial support and concerns over the security of loans are barriers some face when starting a new business. While traditional business loans can often be seen as the only route to finance, they may not be accessible to new-start businesses. Many traditional banks and mainstream lenders steer away from providing finance solutions to new-starts due to rigid underwriting criteria:

Credit History

  • New-start businesses are unlikely to have an extensive record of past financial performance and this lack of credit history often bars mainstream lenders using automated credit scoring systems from approving lending applications.

    • Repayment Terms

  • Cash flow can be unpredictable for startups, especially during the initial phase.  Fluctuating sales and upfront supplier payments mean the repayment terms set by many mainstream lenders are often unsuitable.

    • High-Risk Perception

  • Small business and new-starts are perceived as high-risk by traditional lenders, resulting in lower approval rates. For example, the approval rate for SME loan applications sharply declined in Q2 2023 to reach 45%; the lowest on record.

    • Accredo Supports New-Starts

    With many borrowers noting high interest rates and restricted access to funding as the biggest barriers to starting a new business, Accredo accepts the difficulties that come with starting up and overcome these by always looking at the bigger picture and offering bespoke payment profiles that work for them.

    We are one step ahead when it comes to supporting new businesses and we are committed to finding the right secured finance solution for our broker’s clients. We aim to meet the unique needs of each new-start, and cater to those with complex or limited credit profiles by providing tailored funding solutions with competitive interest rates.

    By choosing Accredo, our brokers and their clients can be confident they will receive the financial support they need for their business to thrive.

    References:

    https://www.ionos.co.uk/newsroom/news/turning-aspirations-into-action-63-of-brits-want-to-start-their-own-business/

    https://www.smeweb.com/61-of-brits-aspire-to-be-their-own-boss/

    https://www.gov.uk/government/statistics/business-population-estimates-2023/business-population-estimates-for-the-uk-and-regions-2023-statistical-release 

    https://www.gov.uk/government/statistics/companies-register-activities-statistical-release-2022-to-2023/companies-register-activities-2022-to-2023

    https://www.british-business-bank.co.uk/sites/g/files/sovrnj166/files/2024-03/small-business-finance-market-report-2024.pdf