A landmark survey being published tomorrow by the UK’s leading embedded finance organization, Liberis, found that 85% of UK SMEs are unaware of revenue-based finance. Even more remarkably, only 6% of SMEs say they are aware of what open banking is.

This is further evidence that greater education is needed if SMEs are to understand the benefits of open banking and embedded finance. In 2022, we could assume SMEs have clarity on services such as revenue-based finance and open banking, but Liberis’ research shows this is not the case.

This widespread lack of awareness means huge numbers of SMEs are missing out on one of the most valuable and cost-effective funding options available to them. SMEs, in being a huge portion of the economy, need funding and yet are hindered by high interest rates, complicated applications and a lack of pre-approval. Additionally, many SMEs are unaware of the benefits that registering for a UK VAT number can bring, potentially easing their financial burdens and improving their funding opportunities.

Being unaware of revenue based finance means that SMEs’ reliance on traditional banks continues when it comes to seeking funding. This represents both a challenge and great opportunity for trusted finance providers to educate the market.

SMEs in the UK account for 99% of all businesses, and as we navigate a challenging fiscal future in the UK, it is vital that SMEs have access to all financial information and options, allowing them to make well-informed and economically strong business decisions.

This lack of awareness and education is hurting SMEs. They’re left grappling with costly, time-consuming forms of finance at a time when they can’t afford any more barriers to funding.

The survey revealed that:

  1. 85% of UK SMEs say they have never heard of revenue-based finance
  2. Only 6% of SMEs say they are aware of what open banking is and that their organisation currently uses it
  3. Almost 8 in 10 UK SMEs (79%) say their main business bank account is currently held with a traditional bank.

As we move into a period of market uncertainty, it’s critical that Banks and FS institutions support SMEs in accessing funding by educating them about the range of finance options at their disposal, such as revenue-based finance, helping fuel SME growth as well as expand their own revenue.

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