That is almost as many as the one in five that were able to secure business financing from their bank during their first year of operation.
A further 13% did not obtain direct business finance at all, but instead called on friends and family to help them raise the average launch fund of £2,143 that it takes to start a company.
James Benamor, founder and CEO of Amigo Loans, says: “For many small business owners, once they’re turned down by their bank they’ll have to try and find the money elsewhere or resort to extreme measures such as taking out a payday loan.”
However, this leaves them open to the risk of “destroying” their credit score, as high interest charges can quickly rack up if a new business does not quickly become profitable.
With just one in ten of the nation’s smallest businesses now believing their bank would be willing to lend to them, it’s also becoming harder for these small firms to grow.
One in four would need available funds to be able to invest in expansion; 14% would expect to use their own overdraft or credit card to do this; and 22-23% each would like to take on new staff and new equipment, but are unable to get the funds to do so.
As always, many small businesses could benefit simply from a more focused approach to credit control and the invoicing process, smoothing out any bumps in cash flow and freeing up more funds for investment and expansion by reducing the total amount of credit extended to customers.