- 22% of SMEs that needed external finance over the last two years were unable to access it
- 27% have had to stop or pause an area of their business because of a lack of finance
- Biggest barriers in sourcing finance were cost, processing times and lack of flexibility with repayment terms
- 34% of SMEs are concerned that their business will not grow in the next 12 months, however, with appropriate external finance, SMEs believe their business could grow by around 17%
- The Recovery Loan Scheme deadline passed on 30th June meaning capital-starved SMEs will need to source alternative forms of lending
More than one in five (22%) small and medium sized enterprises ("SMEs") that needed external finance and/or capital over the last couple of years were unable to access it. Indeed, over a quarter (27%) have had to stop or pause an area of their business because of a lack of finance. This is according to new research* commissioned by
The research showed that the biggest barriers faced by SMEs in sourcing external finance/and or capital were that it was too expensive (23%), the process took too long (19%) and that there was a lack of flexibility with repayment terms (17%). SMEs also cited other barriers such as the fact that the lender didn't understand their business (16%) and that they received poor customer care (10%).
The research also revealed that SMEs have been forced to pause or stop activities such as expanding into new markets, hiring the right personnel and marketing, because of lack of financing. Manufacturing, Finance & Accounting, Retail and IT & Telecoms were the sectors that were affected the most because of a lack of external finance and/ or capital.
Over the next 12 months, nearly two in five (38%) SMEs believe Sales will be the biggest areas of business that will see growth followed by recruitment (19%), new product development (18%) and new market expansion (17%).
The research also highlighted that a third (34%) of SMEs are concerned that their business will not grow in the next 12 months. However, with appropriate external finance, SMEs on average believe their business could grow by around 17%.
On
Some sectors of the economy are recovering more rapidly than others. For those still struggling sectors, they require an additional government intervention, but for the remainder, no further Government intervention is necessary.
"A sector focused government-backed loan scheme which brings together both traditional and alternative lenders to guarantee the future of our SMEs in struggling sectors, is critical to ensure that opportunities for their growth are not missed. We very much hope this is something that becomes a reality. In the meantime, all SMEs would be well-advised to take stock of their current capital structures and, if appropriate, access fixed term, fixed rate loans to prevent additional exposure to an increasingly volatile lending market."
ENDS
Notes to Editors
*Research carried out by YouGov with 500 UK SMEs between 30th May -
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