Just over three-quarters of UK SMEs have admitted that the risk of lending and ending up in debt is putting them off applying for funds externally. According to research the ‘non-borrowing culture’ within small businesses is preventing the market to return to its pre-financial ‘crisis state.’
Research has discovered that SMEs would rather turn to the genius search engine; Google for advice about their finances and just 39% would seek advice from their bank. Business owners seem to be more willing to get their business advice from unregulated sources. This could be a reason why so many SMEs are still in the dark about their alternative options.
Three-quarters of SME owners on average are feeling vague about what alternative options are available to them. A small 2% of the business owners surveyed borrow money frequently. Owners of SMEs commonly have a higher understanding of what their traditional lending options are this includes bank loans, overdrafts and asset finance.
86% plan to uphold their private ownership within their businesses, whereas 7% would like to be acquired, 2% are looking for equity backing and 4% are looking elsewhere for other ‘end goals.’
Just 40% of SME owners are feeling optimistic about the pressures their organisations face against competition and their digital place. SME owners are struggling to deal with the high demands of having a business so they believe external finance could help maintain the businesses financial balance that might have occurred due to the recession.
Director of Sales and Marketing at Wesleyan Bank, Sean Read who commissioned the research has commented;
“Without external finance, many SMEs are stilting their chances of prospering and fulfilling their ultimate potential. It’s only natural for small businesses to be cautious about making a financial investment, but there’s an equal risk in failing to seek support for growth.
“The SME community needs to understand the plurality of finance options available to them, beyond relying on internet-based research alone. Trusted and leading providers, such as Wesleyan Bank are able to explicitly support SMEs by offering specialist products and guidance that is tailored to their growth plans and business situation.
“The recession may have instilled a ‘non-borrowing’ culture into the mindsets of many SME owners, but now we’re working in a better economy, it’s time for them to broaden their horizons. SMEs are the lifeblood of the economy, after all.”