Businesses are apathetic about seeking finance, according to a study
Nearly four fifths of small and medium-sized enterprises are ‘happy non-seekers of finance’, research finds.
Some 78 per cent of SMEs report that they had neither applied, nor wanted to apply, for loans or overdrafts in the previous 12 months, the highest figure to date.
According to the SME Finance Monitor by BDRC Continental, 15 per cent of SMEs interviewed in the third quarter of 2013 report a borrowing event of any kind in the 12 months prior to interview, representing a decline from a peak of 25 per cent in Q1 2012.
Applications for new or renewed loans and overdrafts are also at their lowest level to date at 7 per cent of all SMEs, down from 12 per cent in Q1 2012.
Some 7 per cent of the companies surveyed meet the definition of a ‘would-be seeker’ of finance (those SMEs that would have liked to apply for a loan or overdraft but felt that something stopped them).
Almost two fifths of respondents report an injection of personal funds into the business in the previous 12 months, continuing a downward trend seen since Q3 2012, when 46 per cent of had reported an injection of funds.
There are signs of increased optimism about the future, especially among SMEs with employees, but this has not translated into future appetite for finance which remains muted.
Some 47 per cent of SMEs plan to grow in the next 12 months, slightly lower than the 51 per cent reported in Q2.
Shiona Davies, director at BDRC Continental says that the study’s 50,000 interviews mean a comprehensive understanding of the challenges faced by SMEs.
She says, ‘Our analysis shows that SMEs with employees are more optimistic about the future, but that this is not shared to the same extent by the SMEs with no employees who make up the majority of the market.
‘Nor are we currently seeing evidence that this increased confidence is driving an appetite for external finance, even amongst those planning to grow.’See also: Help for small businesses seeking investorsRelated topics: Small business funding You have been subscribed to the newsletter.