With Brexit just around the corner, UK businesses could well be set for a shaky few months. The economic landscape is liable to be turbulent, to say the least, and for small businesses, that could spell disaster. And, if the latest report by the Federation of Small Businesses (FSB) is anything to go by, many small businesses could struggle to grow in the near future because they are struggling to get the right financial support. According to the latest edition of ‘Going for Growth’, only around one in every seven SMEs is currently going through the process of attempting to attain external finance. The majority of those that aren’t applying, claim the main reason is that they believe they either won’t be accepted, will not be offered a competitive lending rate, or don’t understand their options. We look at why a lack of SME financing is hampering growth.
Problems for minorities
Not only does the report highlight the difficulties that small businesses are facing when it comes to being granted finance, but it also states that the problem is even more pronounced for companies that are run by people from black and ethnic minority backgrounds. Similarly, more women (43%) said they were having problems attaining finance when compared to men (38%). This is, quite clearly, an issue that needs to be ironed out.
A knowledge gap
Despite these findings, the report also demonstrates that many small businesses could well be struggling to grow, simply because they don’t understand the value of borrowing, or have concerns when it comes to how they will pay the money back. Almost half (49%) of SME bosses currently meet the definition of ‘permanent non-borrower’, which means they are not borrowing any money at the current time, and don’t plan to in the near future. However, this correlates with the fact that more than two in three SME owners (68%) admit they do not understand what equity finance is, or how it could benefit them and their business.
Support when it’s needed most
Small businesses are the backbone of the economy, job market and culture of the UK. Over 99% of all businesses are regarded as SMEs, and together they employ in the region of 5.7 million people. Therefore, it is absolutely essential that they continue to thrive, especially in these uncertain economic times.
SME Financing – where to find out more
We are here to offer the guidance and advice SME owners need to grow and expand in a way that is both affordable and viable. To learn more, get in touch today.
Find out about the different forms of financing we can offer on our Alternative Finance web page.