Widening Access To Capital: YouLend Impact Report

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.

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To discover more about how YouLend's financing is positively impacting the economy and promoting financial inclusion for SMEs, read the full report here.