SMEs hoping to gain financial advice from experts within the high-street banks and lenders are finding it hard to open the door.
Just 19% of businesses who employ 10-250 employees have admitted that the service they receive from their banks meets their expectations which implies an incapability from the lenders that are there to assist SMEs and their needs.
A survey was sent to 1,000 SMEs, conducted by Close Brothers Group, requested information about the stages of growth their business has been through. It revealed that, when it comes to financial advice, their needs are not being fulfilled.
46% (just under half) of SMEs who took part in the survey faced brick walls when it came down to requiring finance for their business whilst almost a quarter (24%) were denied finance when hoping to grow their business.
Of those who hit walls when accessing finance, 22% believe that the lenders were unable to understand what their requirements were which introduces the ‘advice gap.’
The survey also found that ‘generalist lenders’ (which covers 90% of the lending to SMEs) cannot actually fulfill the requirements of the businesses looking for finance. As expected this causes a barrier within the SME community, more so as just 38% of SMEs visit their banks for advice on finances.
As well as the gap when it comes to advice, there is also an issue with business planning long-term where just 28% of SMEs who are already preparing their finances for the year to come whilst 8% aren’t considering prospects.
CEO of Close Brothers, Adrian Sainsbury admits his opinion of a ‘commercial division’ matches the SMEs who are worried about the support that they aren’t currently receiving from banks and lenders he comments;
“Many do not feel their banks aren’t taking into account their sector and specific circumstances, meaning they are not receiving the level of support they need to secure the right products and funding for the future.
“Given the importance of SMEs to the economy, it is vital that these companies are properly understood by the mainstream funders they turn to for guidance, whether knowing the specific financial needs of that business in particular sector, or identifying the type of lending that will best suit their business at any given time.”