SMEs struggling to access and raise capital for growth

The UK’s small businesses need greater access to finance in order to drive growth, according to new research.

Business owners are struggling to raise capital despite having clear revenue-generating concepts, the Unlocking UK Productivity report co-produced by Goldman Sachs, the British Business Bank and the Enterprise Research Centre claims.

A reluctance to surrender equity or to take on debts were among the reasons listed for this, alongside a lack of awareness of available alternative finance options.

Despite this, small businesses still require funds to drive product development, expand overseas and up-skill their staff.

A lack of funding will therefore inhibit growth, result in fewer new products and ultimately reduced sales volumes, especially if competitors are able to get ahead in the market.

The report suggests that credit availability has improved for SMEs across the last three quarters, as have flows of equity finance.

However, 60% of small firms expressed a desire to expand in the next 12 months, meaning more will be expected of financial sources.

Alternative finance options including debt funds, challenger banks and crowdfunding platforms are among the methods that could be used to benefit businesses.

These options are vital for any business looking to refinance, especially if they are facing cash flow issues or need to manage debts effectively.

British Business Bank Chief Executive Keith Morgan has described small firms as being a vital part of the economy and added that it is essential that those with high growth prospects are given the right support.

Fostering confidence among small business leaders is key, as they need to have confidence in the financial decisions that make, alongside an awareness of what the outcomes may be.

Businesses may also want to consider an independent review of their set up, which can identify issues with finances, assets and strategy, providing solutions for a secure long-term future in the process.


By Phil Smith


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