However, our latest SME Pulse survey of commercial brokers suggests that demand has cooled of late, though perhaps only temporarily.

Firstly, it’s worth emphasising that there is still strong interest among business bosses in raising external financing.

Almost half of the commercial brokers we surveyed in the latest Q3 Pulse reported that they were seeing increased appetite among their clients, a really encouraging proportion, compared with the 15% who said they had seen interest decline.

However, it’s the movement compared with the previous edition of the Pulse that is particularly notable.

Back then, almost two-thirds of brokers stated clients were increasingly keen to borrow, with a paltry 3% suggesting interest was declining.

So what’s behind this shift in intentions?

The price of political uncertainty

A big driver according to our study is the state of the political world, while we have a new government, with a large majority, that hasn’t led to an improvement in stability - yet, at least - in the views of many business owners.

This largely comes down to the Budget. The new Labour administration made no secret of the fact that tax rises were on the way, but a lack of clarity around what shape they would take evidently caused some business bosses to pause their plans.

Individual brokers told us that their clients were holding off, opting to wait and see what their tax liabilities and employment costs are likely to be in the coming years, before moving forwards with potential borrowing.

Falling confidence

This uncertainty came through in another question, which quizzed brokers on how the change in government and recent base rate cut has impacted the confidence of their business clients.

More than half said there had been no change, but it’s interesting that almost a third have become less confident, again down to concerns around the impact of the Budget on their bottom line.

Brokers were also asked about whether the funding demands from commercial clients have changed since the election and rate cut. Again, there has been little shift for most (66%), though almost one in four brokers (22%) said they had seen demand jump in the interim.

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It will be really interesting to see how these attitudes shift in the months ahead, now that we have had the Budget and can see the shape of the government’s plans for the future.

It may not take a lot for brokers to see how the changes made in the Budget impact confidence, and with it demand, from their commercial clients.

Looking to property

Among those looking to borrow, it’s striking just how many are focusing their sights on purchasing a property — our study found that more than half of brokers cited it as the main purpose for borrowing among their clients.

That’s up sharply from the 44% recorded last time out and suggests that plenty of business bosses believe now is an opportune time to build firmer foundations with their premises.

In some cases this will be businesses who are currently tenants, but have seen the opportunity to take ownership of their premises as their landlord looks to sell up. For others, it will be about taking a step forwards in terms of growth, looking to expand their operations, perhaps into new geographic areas.

But what unites them is the belief that investing in their premises will improve their business’s prospects.

What next for business borrowers?

The Budget represents a significant milestone for the commercial market. Brokers will have seen firsthand how the uncertainty and expectation has caused their SME clients to adopt a more cautious approach of late.

But that uncertainty has now largely cleared, allowing business bosses to plan their future activities with more clarity now they know where they stand on tax, national insurance and wages. 

These changes have given business owners plenty to think about when it comes to their finances, and it may take some time to see how it impacts lending decisions. While some business owners may pull back as a result, others will see this is an opportunity to invest and grow.

That’s why it’s so crucial for brokers to work with lenders who want to support businesses with their borrowing plans. 

It’s been a common thread of recent Pulses that a significant minority of brokers experience issues in securing finance for their commercial clients, holding back the business’s prospects of meeting their ambitions.

Pinpointing lenders that truly judge each case on its individual merits and will look for ways to make a case happen is vital. Together we can help businesses push on, irrespective of the contents of the Budget.