The demand for business loans is evident in realm of company acquisitions and MBOs, with two-in-ten brokers witnessing an increase. Credit: Mongta Studio / Shutterstock.

Around a third or 31% of brokers observed a significant shift among commercial finance clients towards business loans, according to a recent survey by Asset Advantage, a UK-based provider of business finance for SMEs.

The survey was aimed at understanding the challenges brokers face and their perceptions of the lending landscape.

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It also sheds light on the evolving preferences of commercial finance clients.

For around 24% of brokers, the pivot to business loans is driven by the complexity of projects that require adaptable funding solutions.

The data shows that this flexibility is crucial for clients undertaking intricate ventures that may not fit traditional lending models.

The need for business loans is also evident in the realm of company acquisitions and management buy-outs (MBO), with nearly two-in-ten brokers witnessing an uptick in such cases.

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Additionally, 5% of brokers said more clients looking to venture into new markets, further highlighting the diverse financing needs of businesses.

The survey also revealed that almost half of the commercial finance brokers have seen a blend of business loans and asset finance, suggesting that clients are diversifying their funding strategies.

This mix allows for a more tailored approach to finance a wide array of projects.

Asset Advantage credit and risk director Philip Knight said: “Our survey findings certainly mirror what we are seeing on the ground with growing demand for business loans.

“There’s no question that flexibility is a key driver behind this, moving beyond pure business acquisition to include broader asset classes and industries, as well as more bespoke and complex funding requirements.

“Given the broad growth ambitions of UK SMEs, as well as the climate of the past few years, it’s hardly surprising to hear that projects are becoming more complex.  

“It requires lenders to take a much more holistic view of both the deal and the company to help brokers meet the needs of their clients. This year we’re celebrating our tenth anniversary of offering business loans of up to £1m ($1.3m), helping brokers better serve their clients through fully flexible funding.”