SMEs throughout the UK fear the terminology that comes within the business and finance sector that, for some it has turned them off applying for finance completely.
It may sound like a record on repeat, but since Brexit was announced during June 2016, it has left a pit in many of the 5.5 million SMEs stomachs in the UK. What’s more, reports found that £26bn is actually payable to small businesses.
Almost half of SMEs who took part in the research have revealed that they have felt discouraged to apply for finance due to the lingo used within the sector. The research which was conducted by LDF, exposed that 47.8% have felt completely put off that they haven’t applied while 33% couldn’t understand terms such as; CAPEX, ROCE (31.4%) and Ebitda (30.4%).
Throughout the UK, 57.1% of small to medium-sized businesses located in the East region are the ones to be most likely turned off when it comes to applying for finance and 70% of those who live in the South West are relaxed when it comes to the terminology associated within the business and finance sector.
Peter Alderson, managing director at LDF comments;
“It’s disappointing, but perhaps not surprising, that nearly half of UK SMEs are put off applying for finance by the terminology used.
“For many, running an SME is a challenging, all consuming activity, so complicated financial jargon and acronyms are just extra barriers in the way of their success.”
The language barrier also differs across sex, age, company size and sector
Research found that 53% of women are much more likely to avoid applying for finance due to the terminology while just 35.3% of men feel the same.
When taking the company size into account, 56.8% of corporations employing between 50-99 people find the lingo the most off-putting whereas 32.4% of businesses with a max of 9 employees and 35.3% of companies with 10-49 staff feel the same.
Alderson continues to say;
“The point at which a larger number of SME owners are suddenly put off by business and finance technology is an interesting one.
“There seems to be a tipping point, at which the companies really start to grow, and there is often a need for additional finance, but the language used doesn’t encourage people to apply, potentially hindering their expansion.”
Research also reveals that 22% of those aged 55 and over struggle the least with business and finance jargon whilst a shocking 58.2% of 25-34 year olds do not feel comfortable and are turned off applying for finance. Whereas 45.9% those of the ages 16-24 are behind the 55’s and over, understanding the lingo and are less likely to avoid applying for finance.
To conclude, the research also found that those within; professional services, wholesale, retail, medical, manufacturing and construction are the ones not to be put off by business and finance jargon while those in administrative are easily turned off.