Fewer SMBs seeking external finance, study reveals

Thursday 29 November 2012

Fewer than half of all small and medium-sized businesses (SMBs) are using external finance, a new study has indicated.

Research conducted by BDRC Continental found that 57 per cent of SMBs neither use external funding, nor have any immediate plans to seek it.

The firm's latest SMB Finance Monitor revealed that the use of core banking products such as loans, overdrafts and credit cards declined by five percentage points year-on-year.

This figure fell from 39 per cent to 34 per cent between Q3 2011 and Q3 2012, BDRC Continental reported.

Shiona Davies, director at BDRC Continental, said there are "clear signs" that SMBs are under pressure, and that fewer of them are seeing external finance as an option for their business.

"Some SMBs feel discouraged from applying, and their perception is that access to finance is becoming more of a barrier," she stated.

"This is despite the fact that 71 per cent of applications have been successful since we began the monitor, although first-time applicants continue to find it more difficult to access finance."

Ms Davies said that although the banks and government are undertaking various initiatives to boost lending, awareness of these has not increased over the past 12 months.

"This suggests that communication and awareness raising activities could help to encourage SMBs," he stated.

Posted by Steve Williams