SMEs reluctant to access bank debt

The latest SME Finance Monitor indicates a drop in small and medium sized businesses (SMEs) looking externally to raise finance. According to the quarterly research, 36 per cent of companies used external finance in the period from April to June, down from 44 per cent four years ago. Almost half of businesses said they had no intention of borrow money from external sources, this is despite application success rates increasing to 81 per cent in the 18 months to Q2 2016 from 69 per cent in Q4 2012 and 80 per cent of SMEs reporting making a profit in Q2 2016.

Whilst three quarters of small businesses said they were willing to accept a lower growth rate rather than borrow to expand more rapidly, George Nikolaidis, senior economist at EFF, the manufacturers’ organisation, warns: "We should not be complacent about this lingering reluctance to access bank debt. It could mean that businesses are not getting all the ammunition they need to invest and realise their full growth potential."

At Beavis Morgan, we work with a number of SMEs and so we understand that cash is king and managing your cashflow is crucial to your immediate and long-term success. For more information about how we can help you and your SME business, including how best to structure your business for tax and improve business performance, contact Steve Govey, Partner within our Beavis Morgan Entrepreneur & SME Support Team. If required, our partner business, BM Structured Finance, is also available to assist in advising on and sourcing the right finance options for your business.