The first quarter Trends Report from Isme shows SMEs’ confidence in future sales recovering strongly this year, reaching positive figures for the first time since 2019.

Sales expectations reached 28%, up from -10% in Q4 2020 and a far cry from the extreme low of -40% in the first quarter of last year. Similarly, business confidence also returned to positivity, going from -33% in Q4 2020 to 6% this year, while business expectations rose from 26% to 36%.

Brexit uncertainty fell by four points from 46% to 42%, and general economic uncertainty by seven points, from 69% to 62%, both still at historically high levels.

Retail and services sectors were generally more confident and showed higher expectations than manufacturing. On pay, 59% of SMEs said they would not be able to increase pay this year, up from 52%, with 20% willing to up pay by 0.5% to 2.4% and 15% by 2.5% to 5%. Three per cent intend to cut pay by more than 5%.

Business owners themselves won’t be taking big increases either — 68% won’t be taking more from the business, and 15% will reduce their pay packet. Just 4% will swell their pay packet by more than 5%, with 11% boosting pay by less than that.

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The top five concerns at the end of 2020 were, from highest to lowest, Covid19/lockdown, economic uncertainty, Brexit, reduced orders and insurance costs. The latter saw 29% levels of concern, up from 21% at the end of 2020.

SME owners are not happy with the government’s performance, with 69% either dissatisfied or very dissatisfied and only 2% very satisfied  and 29% satisfied.

Isme’s quarterly Bank Watch report shows that demand for credit continues to rise, but the level of loan refusals remains steady at 35%, a slight fall of two points on Q4 2020. However, only 46% of applications were fully successful, down 7% on Q4 2020.

Chief executive Neil McDonnell (pictured) said: “There is an interesting contrast evident between the success of the SBCI Future Growth Loan Scheme and the SBCI SME Credit Guarantee Scheme. The former is more than twice as popular with SME borrowers than the latter, which may be down to the longer terms of loans available. 

“Bank approvals of the Future Growth Loan Scheme are also significantly higher than those for the Credit Guarantee Scheme.”

The full Trends Report is available here, and the Bank Watch report here.