Many businesses are struggling to access finance through the preferred methods, and may be resorting to putting their personal finances at risk in order to borrow, an AXA Business Insurance survey suggests.
In the past year, 12% of the SMEs surveyed by AXA have accessed funding, but only a small minority of these are pursuing the channels that are specifically designed to give them the finance they need.
Only 5% used the Funding for Lending scheme, 6% opted for Enterprise Investment Schemes or Seed Enterprise Investment Schemes, and 7% took out a government loan.
In contrast to this, 20% took out a direct bank loan, and 44% raised the funds they needed either from friends and family, their own overdraft, or via a credit card.
Darrell Sansom, managing director at AXA Business Insurance, says: “We know from our customers that setting up a small business can be really hard work and that much of the admin and paperwork is very daunting.
“However, there is help out there and we would urge government and all those with an interest in SMEs to ensure that the promotion of support services is given suitable backing; all the little bits of help SMEs can get will make a big difference to their future.”
The survey also revealed some of the things SMEs think could make the greatest contribution to their future success.
Nearly a quarter think that dedicated helplines to provide SMEs with business advice would be the best step to take.
But tellingly, the stand-out entry on most SME wishlists was tighter regulation of invoice payment terms, highlighting again that cash flow is still the life blood of small businesses everywhere.