Why UK SMEs Are Suffering Financial Distress
According to Financial News UK – SME owners are suffering financial distress to find funding for their scale-up plans, with just 41% of able to access capital through their preferred funding route. Growing businesses in the UK are still struggling to access suitable funding, despite many requiring further financial support.
Business Funding & Personal Loans Ratio
Business owners who received business funding whether through banks, personal loans or specialist lenders, 34% felt that it wasn’t enough for their investment plans. In addition, 24% felt that the type of funding they used was too costly.
With access to funding widely regarded as crucial for scale-ups, 26% of those had secured finance claimed, they were unsure how to use it. Potentially, smaller businesses require additional support when it comes to finance products. In fact, 20% of UK SMEs said the funding they had received was not suited to their business.
Economic Growth In UK
Low productivity hinders economic growth and improving productivity is vital, particularly as the UK prepares to leave the EU. Given their importance to the economy, SMEs will be central to potential productivity gains.
Today SMEs need access to the right finance and support to invest in training staff or adopting new technologies so increasing awareness of financial destress options is crucial. Bespoke funding solutions which align to specific needs and growth plans are always preferable to a one size fits all approach.
Finance Ratio Across Globe
The problem is not limited to the UK either. Almost 16% of SMEs across the UK, Germany and France were unable to access capital at all. German SMEs were good enough able to secure finance through their chosen route (47%) compared to French SMEs (33%).
With the World Bank revising down its growth forecasts for the UK, alongside reports that the UK’s trade deficit widened to a worse-than-expected £12.2bn in November, our data shows that levels of financial distress continue to rise across the country.
Although record numbers of new start-ups continue to join the economy each year, with growing numbers of aspiring entrepreneurs returning to more established businesses.
However the amount of finance advanced to the UK’s smaller businesses is the highest year on year boost since the recession, as businesses increasingly shift away from more ‘traditional’ types of finance and turn to invoice finance to help finance their business growth.
The amount of finance advanced to the UK’s smallest businesses through invoice finance jumped by over 60% in the last year, reaching £711m up from £435m the previous year, according to abfa financial news.
Invoice Funding are leading Invoice Factoring & Invoice Discounting Brokers for UK Based business. If your business is starting to show signs of financial distress due to lack of funding, please view our website for products available. More information on business funding is available please complete the online enquiry form and a member of our team will contact you by return.