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YouLend’s 2023 Impact
As SMEs continue to face economic headwinds, alternative finance has an opportunity to make a real difference for small businesses, especially those typically underserved by traditional providers.
In 2023, YouLend partnered with Experian, a leading global data analytics and consumer credit reporting company, to analyse the social impact of YouLend’s financing when it comes to female-led, ethnic-minority and financially disadvantaged businesses. Together, we have examined over 100,000 instances of SME financing via YouLend’s platform.
SMEs face economic uncertainty
SMEs have shown a growing interest in external capital to manage cash flow, with 61% of SMEs seeking finance for working capital in 2022. Banks reported quarter-on-quarter growth of 20% and 11% for loan and overdraft applications, respectively. However, success rates for business loan applications fell from 80% in 2021 to 60% in 2022. As a consequence, gross capital lending declined from £4 billion in Q4 2022 to £3.7 billion in Q1 2023.
Research from Q1 2023 also found that just 12% of businesses described the affordability and availability of new finance as good, with over half (51%) saying it is poor or very poor.
Overall, in 2023, SMEs faced severe economic uncertainty yet continued to grow with the support of financing options.
YouLend contributes £6.8 billion in SME revenue to annual UK GDP
YouLend's financing has made a significant contribution to the UK GDP. By the end of H2 2023, YouLend estimates that financing under management have contributed £6.8 billion in SME revenue to the UK GDP, with businesses seeing a 26% increase in sales within six months of receiving funding, surpassing market average. YouLend customers also saw a significantly higher EBITDA growth of 55% compared to the total market which saw a growth of only 27.7%.
Women-led businesses receive 18% more of total funding at YouLend than UK average
Aggregate data from the British Business Bank suggests that female-led businesses could be more price-sensitive to the cost of external capital and are more likely to see the application process as a barrier, with concerns such as risk and time-to-cash ranking higher than other groups.
While 19% of all businesses are led by women, only 12% of total investments are directed towards women-led businesses. With our agnostic credit decisioning model, a greater proportion of YouLend financing is directed towards SMEs with female directors or equal leadership teams. 29% of all applications received by YouLend are female-led businesses, compared to 17% at national average, and YouLend approves 30% of total funding for female-led businesses, compared to the UK average of 12%.
YouLend approves 35% of total funding in areas where ethnic-minorities are greater than ~one third
Ethnic minority-owned businesses have also faced higher levels of rejection compared to their majority-owned counterparts, with 15% reporting being turned down for finance at least once, compared to 4% of other businesses.
A total of 35% of YouLend financings were issued in areas where the ethnic minority representation is above 30%, demonstrating a strong uptake of alternative finance by underserved groups.
YouLend’s largest financing segment was to the most deprived UK areas, as defined using Indices of Multiple Deprivation (IMD), with 27% of loans serving the UK business most deserving of financial support.
Technology is improving access to capital
YouLend's technology-led approach to lending has also expanded and equalised access to capital for SMEs. With instant decision lending technology and streamlined risk assessment processes, YouLend provides a faster and more efficient financing service to SMEs compared to traditional providers.
Using our own proprietary risk modelling, YouLend is able to offer 90% approval rates for applicants, well above the 64% average for the UK in 2022, and above the previous government-assisted rate of 80% in 2021.
Overall, our tech-driven financing is creating a sizeable impact on the health of small businesses.
To discover more about how YouLend's financing is positively impacting the economy and promoting financial inclusion for SMEs, read the full report here.
