British SMEs turning their backs on finance options

An overwhelming majority of Britain’s small and medium sized businesses were not interested in external finance in the final months of 2013, according to the latest figures.


It comes at a time when the UK economy is gradually recovering, growing by 1.8% in 2013 – its fastest rate for six years.


However, business investment remains relatively slow, raising concerns at the Bank of England over the state of the recovery.


According to the SME Finance Monitor, 79% of smaller firms were “happy non-seekers of finance” during the fourth quarter, the highest figure recorded.


These companies were ones that had not applied for finances despite there being no restrictions on them doing so.


Meanwhile, only 4% of SMEs questioned were deemed to be “would be seekers of finance” suggesting many firms are focused on other aspects of their businesses.


Part of that revolves around ensuring that the companies can continue trading without requiring a complete business turnaround or alternative management procedure.


A small minority looking for finance


Businesses that are wishing to access finance from the banking sector can find some useful tips on how to do so here.


Other companies could be more focused on recruitment policies and developing online sales platforms as a means of boosting their business.


Research firm BDRC Continental compiles the report and firm director Shiona Davies said: “SMEs ended 2013 feeling more positive about the economy.


“However, there are few signs of this leading to an increased demand for external finance.”


The Bank of England has attempted to improve credit conditions via the Funding for Lending scheme, but despite the attractive propositions on offer from banks many SMEs are still not interested.


According to the BDRC report, the portion of firms saying that Funding for Lending would encourage them to apply for finance fell to 14% in Q4.


That compares with 20% the year before when access to finance was deemed more difficult.


By Phil Smith


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