A BROKER’S PERSPECTIVE

Allica also surveyed our broker community to understand the mood of the commercial finance sector towards how the recession threat is affecting their clients. 222 of our broker partners kindly shared their insight with us.

We started by asking how rising costs, such as the increase in interest rates and energy bills, have affected their SME clients’ business plans for 2023.

Understandably, the significant majority reported that most of their clients have been forced to make an adjustment of some kind. Just over a third said their clients had their plans ‘severely disrupted’.

However, over half of respondents said that, while the disruption has, of course, had some effect, this was only limited, resulting in them only having to make ‘slight changes’, and that they weren’t overly concerned. Around 6% said it hasn’t affected their plans at all.

HOW HAVE OUR BROKERS’ CLIENTS RESPONDED?

When asked how their clients responded to rising costs, 65% of brokers said they had to delay or reduce their growth plans for the year.

Many reported that their clients were exploring how they could best manage their cashflow—with 48% reviewing their variable costs, a third taking steps to reduce their overheads, 17% reducing staff numbers, and 53% passing on rising costs by increasing their prices.

Notably for commercial mortgage brokers, 22% said their clients had already taken out additional finance, while nearly one in ten of our brokers reported that their clients had moved to cheaper premises.

To what extent have rising costs, such as the increase in interest rates and energy bills, affected your SME customers’ business plans for 2023?