SME’s are struggling to get funding in the UK

More than half of small and medium-sized businesses (SMEs) are struggling to get funding in uk.

They need help to boost investment and productivity. Only four out of ten SMEs have been able to secure funding from their chosen lender. 

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Issues raising business finance

According to merchant bank Close Brothers, only 4/10 SMEs have been able to secure funding from their chosen lender. Of these, 34% felt that the capital available to them wasn’t enough to fund their investment plans, while a further 24% said that the type of funding was too expensive.

Since the financial crisis, Britain’s high street banks have been less willing to lend to small businesses over fears they might default. However, the market has recently started compensating to some degree with the growth of challenger banks and peer-to-peer lenders – giving businesses more options.

One in five of our members had their credit applications turned down in the third quarter, while over half were offered a lending rate of over 4%. Adrian Sainsbury, banking division managing director at Close Brothers said “The right funding was integral to improving productivity and investment.” He also said low productivity hinders economic growth and improving productivity is vital, particularly as the UK prepares to leave the EU. SMEs will be central to potential productivity gains.

SME Funding Advice

SMEs need access to the right finance and support to invest in training staff or adopting new technologies so increasing awareness of financial options is crucial. 

However British companies tend to be a little more humble in their approach and in the funds they are seeking. UK investors are typically looking for a strong management team, scalable proposition, large addressable market, a solution to a problem, and a personal rapport with an entrepreneur they can believe in.

Businesses need to have spent time honing their pitches, learning their numbers and of course, must have decided how much money they need. Uk investors are rethinking their strategies and this could be to the advantage of UK businesses.

Reasons why you maybe Failing to get Finance for your Company

Not every company that is experiencing cash flow disruptions or credit problems is a good candidate for finance from a high street bank. In order to qualify you’ll need a viable business model along with a history of stable, profitable performance. Lenders will assess the viability of any company that has made an application for funding. 

They understand that the unexpected happens and can send an otherwise viable business careening off the rails. What they’re looking for then is proof that, if given the chance, you’ll be able to right the ship.

The businesses or directors credit rating may not be the strongest so this may be part of the issue.  The company may trading with clients that are not credit worthy again another issue. 

You should only consider this type of finance if your company has a proven record of profitability and you are certain you can fulfil the terms of the arrangement. Keep in mind also that if turnaround finance is not for you there are other options available that can help your company transcend its difficulties.

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Still not sure how to get funding advice, simply give us a quick call and we will explain what funding options are open to your business if you are struggling to find a solution.

Read more: Commercial Business Finance brokers Newcastle

Business Finance specialist at Invoice funding | + posts

Seasoned professional with a strong passion for the world of business finance. With over twenty years of dedicated experience in the field, my journey into the world of business finance began with a relentless curiosity for understanding the intricate workings of financial systems.

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