Small firms could face staff cuts without finance

One in four small businesses have suggested they might need to cut staff numbers if they are unable to source finance, new research has found.

The study of heads of SMEs, commissioned by Saxo Payments Banking Circle, revealed that many firms are being forced to put growth plans on hold as a result of financial issues.

It comes against a backdrop of a tougher lending environment, as 25% of firms have let staff go in order to keep trading.

Nearly a third reported that they would need to lower prices to stay competitive and boost their cash flow if they are to continue without any form of financial support.

Around four in ten business owners added that a lack of finance was limiting their ability to invest in technology and new equipment too.

Nearly 93% of the 500 directors and decision makers quizzed for the research said that they had accessed a form of business finance in the last five years.

Many revealed concerns over interest rates when trying to source traditional forms of finance, as 58% said they would opt for non‐banks if lower rates were offered.

Sourcing equipment was a predominant requirement for finance, alongside purchasing inventory, expanding into new markets and paying off debts.

The research from the Banking Circle found that just 3% of firms managed to access finance within a week.

However, 33.3% had finance within a two week window, while a further 36.3% waited no more than four weeks.

Around 2% said they waited up to six months to get finance, and although that figure is low, it does represent nearly 120,000 UK businesses.

A range of refinancing routes, as well as alternative finance options, are available for firms facing financial difficulty.

Any struggling firm is advised to seek appropriate advice at the earliest opportunity as that should ultimately mean that more financial or restructuring solutions are available.

If a business is facing up to the threat of insolvency, guidance can also be provided on the best long‐ or short‐term strategies to adopt.


By Phil Smith


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