Access to Finance still most pressing issue for SMEs

In a recent survey, almost 1 in 6 UK SMEs named access to finance as their most pressing issue. Protecting and maintaining healthy cash flow is as important now as it’s ever been.

The latest Access To Finance Survey commissioned by the European Commission and European Central Bank has shown that access to finance is the most pressing issue for 15.4% of the businesses surveyed in the UK. What is interesting is that when asked to scale the seriousness of Access to Finance 1 – 10 (10 being extremely pressing), 45.3% scored it at 5 or more. This would suggest that even if only 15% of respondents gave Access to Finance as their most pressing concern, it is still a major concern to also half those surveyed.

It’s also interesting to note that the most pressing problem UK respondents face is Regulation (21% said this), and that a massive 67% of those surveyed scored Regulation at 5 or more – TAKE NOTE NUMBER 10!! Competition came in second at 19% with Access to Finance third.

A few other stats caught the eye as well: 52% surveyed reported an increase in turn over with an encouraging 38% reporting increased profits, and 27% increased profit margins. However, 60% reported an increase in labour costs and a massive 80% reported an increase in Other Costs (materials, energy etc). I suppose the fact a good number of companies are reporting increased profits despite the fact that costs are rising is an encouraging sign and suggests things are getting better for UK industry.

As a financier, what is particularly interesting to see in this report though is where UK SMEs are accessing their cash. In the last 6 months, UK firms have been using the following to fund their business:

30% used retained earnings or the sale of assets

10% used grants or government subsidised bank loans

45% used bank overdrafts or credit cards (I would be very intrigued to see the split between the two)

27% used new or existing bank loans (again, new versus old would be interesting to see)

60% use Trade Creditors to fund their business (weren’t we meant to be clamping down on this sort of thing?)

22% turned to Other Loans (inter company, director, family etc)

40% used Leasing or Factoring

9% used Equity Funding

It’s also interesting that every company in the survey has used some kind of external funding in the last 12 months. This just goes to show how important the the finance market is to both UK and EU SMEs.

As I have said before, the key thing for all SMEs is understanding the options available to you and getting a good feel for which is the BEST FOR YOUR BUSINESS.

Consider what the money is for; how long you need it for; what security you are willing/able to offer; what you can afford to pay and what you might need to access in the future (some types of funding may restrict your ability to access additional funding later on). Also consider your exit plan – whether this is from the finance itself, or from the business itself.

To discuss how we can help your business or work alongside your current funding agreements, please get in touch for a no obligation chat.

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