Traditional lending has focused on business eligibility for credit more than affordability
In our current capacity, Experian helps lenders to assess the risk to their own business. We calculate the likelihood that your commercial customers will not make repayments, to help you decide if you should or shouldn’t engage with them, depending on your risk appetite. But this is only part of the story.
Affordability is about assessing the risk to the customer, not the lender. To understand that risk, we need to understand how much they could reasonably afford to pay.
In the current economic environment, there are businesses who will struggle. Fair and responsible lending to these customers is of upmost importance.
To find out more about identifying SME Credit Trends, download our report.
Now more than ever, lenders should focus on customer affordability
Experian can help you with this. We are working directly with banks and financial services to build an affordability assessment that works for both you and your customers.
Using a balanced assessment of income vs expenditure, we can define the amount your commercial customers could suitably afford to borrow.
GDP is expanding, but weak outlook remains
The UK is likely to avoid a recession this year, though growth is set to be tepid at best in the short-term, with a mild recovery forming in 2024 as inflation continues to ease.
Quarterly business insolvencies reaches historic high
The number of registered company insolvencies in Q2 2023 was 6,393, the highest quarterly figure since the study began in 2013.
Interest rates: Nearing a peak of 15 years
At their August meeting the Monetary Policy Committee voted to raise the base rate to 5.25%, the highest rate in 15 years and the fourteenth consecutive interest rate hike since December 2021.
The pace of growth has eased, but new lending to SMEs continues to grow
In Q4 2022, lending volumes to SMEs were up +7% year-on-year.
In this report, we cover:

Consumer confidence falling back
The sharp monthly fall signals the continued and mounting pressure that elevated interest rates are placing upon household budgets.
Housing trends: downturn becomes entrenched
Recent RICS surveys shows that buyer enquiries, agreed sales and new sales are declining, while both price and sales expectation remain downbeat in the near term.
Arrears and delinquency rates
Increasing across all core SME credit products, in almost every sector.
A sneak peek into...
Experian UK Small and Medium-Sized Enterprise (SME) Credit Trends Index
GDP is expanding, but weak outlook remains
Monthly GDP is estimated to have grown by 0.5% in June 2023 following a fall of 0.1% in May 2023 and stands 0.8% above its pre-pandemic level.
All major sectors showed growth in June 2023, with production output as the main driver with a 1.8% increase following a fall of -0.6% in May 2023. At the same time, the construction and services sectors expanded by 1.6% and 0.2% respectively.
The June increase partly reflects a rebound from May, where a business day was lost to the King’s Coronation. Nonetheless the increase exceeded expectations and in the three months to June 2023 the economy grew by 0.2%.
The UK is likely to avoid a recession this year, though growth is set to be tepid at best in the short-term, with a mild recovery forming in 2024 as inflation continues to ease.
Business sentiment becomes more modest as rate pressures mount
The UK’s composite final Purchasing Managers’ Index (PMI) which is a main indicator for monthly change in business activity fell to 50.8 in July from 52.8 in June, though marked the sixth consecutive month of activity growth in the UK private sector.
The service sector final PMI fell to 51.5 from 53.7 in June as further interest rate rises stalled consumer demand and wage increases drove up input costs.
The manufacturing PMI declined further with the July reading falling to 45.3 from 46.5 in June as another contraction in output and new orders led to new export business fall for the 18th consecutive month.
The construction PMI showed a strong recovery from 48.9 in June to 51.7 in July. However, house building experienced another steep fall to 43.0 as rising interest rates and borrowing costs led to fewer residential sales enquiries and increased agreement delays.
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To find out more about identifying SME Credit Trends, download our report.

- Experian UK SME Credit Trends Index [March 2023]