Growing number of SMEs seek finance to achieve sustainability goals

01 September 2022

New research from Allica Bank shows SMEs have a heightened focus on finding finance to boost their sustainability, with 65% of commercial mortgage brokers and 76% of asset finance brokers saying they have seen an increase in the number of ‘green loan’ enquiries.

The bank’s quarterly broker survey shows the trend is being driven by SMEs prioritising the upgrade of inefficient machinery, with 48% of commercial mortgage brokers and 72% of asset finance brokers saying their clients sought finance to help fund these projects. Behind this came buying electric vehicles (26% and 70%, respectively) and improving the green credentials of their existing premises (35%, 28%).

Interestingly, nearly a fifth of commercial mortgage brokers also said they’d seen a growing number of clients reach out to them for help specifically to move their business to a more energy-efficient property.

Allica believes that the focus on sustainability is partly to help combat rising costs, with 88% of asset finance brokers and 66% of commercial mortgage brokers saying they have impacted their SME customers’ 2022 business plans.

Earlier this year, Allica Bank announced it would reduce its commercial mortgage rates by 0.25% for prime properties with an EPC rating of A-C, in an effort to support businesses looking to reduce their carbon footprint.

Nick Baker, Allica’s Chief Commercial Officer, says the increase in businesses improving their energy efficiency doesn’t just make sense from a climate perspective, but from a business perspective too:

“While there are serious challenges ahead for business owners, this could be a catalyst for some significant jumps forward in the UK’s efforts to achieve net-zero. The combination of a worsening climate crisis and soaring energy costs will make improving energy efficiency a no-brainer for many businesses.

“Whether it’s better insulating your premises, electrifying your fleet, upgrading machinery, or moving to new premises altogether, it can all help cut monthly outgoings in the long run.

“However, due to the significant upfront cost of many of these projects, brokers are going to play a pivotal role, as a growing number of clients seek the finance to fund them. Those brokers well-versed in how to make a strong funding application for green energy projects will be able to add significant value.”