Three quarters of UK small businesses report profits
Three in four UK SMEs are now profitable according to the latest SME Finance Monitor, showcasing the improving economic conditions.
The improving financial health of these businesses suggests that the recovery is gaining momentum, especially as some firms are turning down the opportunity for additional finance.
According to the latest study – relating to the second quarter of 2014 – from BDRC Continental, there is widespread positivity among many small businesses.
However, 24% of SMEs still said they were facing a certain degree of financial turmoil, as the full effects of the recovery are not felt by everyone.
In these instances, the businesses are being forced to consider their futures to see if the continuation of trade could produce a profitable solution.
Seeking insolvency advice and considering company administration options are possible solutions that could ensure stakeholders do not lose out heavily.
Covering your losses
However, such measures should be implemented quickly in order to negate any possible problems or losses that could come as a result.
The report revealed that 76% of SMEs reported profit in the three-month period, up from 69% a year ago, while 15% of businesses had boosted their finances with personal funds.
Four in ten SMEs described themselves as “permanent non-seekers of finances,” suggesting they are comfortable with their financial position.
Bank lending dropped during the recession due to the higher perceived risks and lending remains down despite government efforts to increase it.
However, there is evidence many businesses and banks have worked to build up funds to cater for any emergency situations and to protect themselves should the economy fail again.
As a result, there is less pressure placed on the taxpayer to bail them out and more solutions are available for those seeking finance.
The current situation is growing increasingly positive for many SMEs, but the fact a quarter remain in difficulty highlights that there is some distance to go yet.
By Phil Smith