Small businesses back European Free Trade Agreement as support for Labour grows
22 November 2017
As the UK prepares to leave the European Union, more than half (57%) of small business owners say they are supportive of joining the European Free Trade Agreement (EFTA), according to a survey(1) carried out by Funding Circle, the UK’s largest direct lending platform.
Small business owners highlighted a number of benefits with ease of exporting and importing coming top (59%). Other key reasons included the benefits of having a larger customer base (46%) and lower tariffs (42%). Only 15% say they do not want to join EFTA.
EFTA or ‘the Norway option’ is a regional free trade area comprising of Iceland, Liechtenstein, Norway, and Switzerland. By joining EFTA, the UK could retain access to the European single market.
In addition, support for the Labour Party has grown, with a 7% increase since April. If an election were held today, 20% of small business owners intend to vote Labour and 37% plan to support the Conservative Party.
Launched in 2010, Funding Circle facilitates lending to small businesses directly from a wide range of investors, and is now one of the largest sources of finance on a net basis in the UK. So far this year, investors at Funding Circle have lent £377 million to small businesses on a net basis, whilst banks’ combined net lending sits at £425 million.(2)
James Meekings, Funding Circle’s co-founder and UK Managing Director, says: “Small business owners are clearly doing their homework on Brexit and researching all the possible options. It’s evident that joining the European Free Trade Agreement is a priority within the small business community and it’s important that we listen to ensure we achieve the best possible outcome for their growth and success.”
Regardless of the uncertainty caused by Brexit, economic confidence amongst small business owners has grown by 5% since July, with 40% feeling optimistic about the state of the economy. In fact, 67% say that they are expecting to see an increase in turnover over the next 12 months, with two thirds (66%) predicting by more than 10%.
Investors at Funding Circle include 70,000 individuals, local and national government, the European Investment Bank and financial institutions such as pension and insurance funds. By opening up small business lending to a wide range of investors, Funding Circle has improved competition in the market, supported job creation and reduced small business dependency on bank lending. To date investors have lent £2.8 billion to more than 28,000 UK small businesses. Businesses funded through the platform typically access the capital they need in seven days, and independent research found that 94% of businesses would come back to Funding Circle first in future.
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Funding Circle (www.fundingcircle.com) is the UK’s largest direct lending platform for business loans, matching small businesses who want to borrow with investors who want to lend in the UK, US and Europe. Since launching in 2010, investors at Funding Circle – including 72,000 individuals, local and national government and financial institutions – have now lent £3.8bn to 37,000 businesses globally. Approximately 10% of investor money now comes from Government sources, including the British Business Bank, European Investment Bank, KfW, the German government-owned development bank, and local councils across the UK. The business has raised £250m in equity capital from the same investors that backed Facebook, Twitter, Airbnb and Wealthfront.
(1) The online survey was sent to UK small businesses that have either borrowed through Funding Circle or expressed an interest. The average business that Funding Circle markets to has been trading for 9 years, has a turnover of ~£200,000 and employs 8 members of staff. The survey was undertaken between 3rd October to 12th October, and 1,254 responses were received.
(2) Data taken from Bank of England ‘(Bankstats (Monetary & Financial Statistics))’ – Table A8.1 ‘Monetary financial institutions’ loans to non-financial businesses, by size of business’ under ‘Net loans (exc overdrafts). Bank of England banks account for at least 75% of the lending market.