In Focus Risk
Access to finance is still causing headaches for SMEs
Small businesses still need improved access to cashflow to avoid the hazards of business life
Richard Waldman Group sales director, Ashley Finance
There has been an awful lot of change sweeping across the UK in recent times. Not least the events of 29 March, with the triggering of Article 50 officially beginning the countdown to our future outside of the European Union (EU). As well as this, the reforms introduced
with the start of the new tax year – the introduction of the apprenticeship levy, an increase to the national living wage, and rising business rates – have all contributed to a general atmosphere of upheaval.
Still struggling But amongst all this change is something that is, frustratingly, continuing to cause issues for businesses across the UK. Our recent SME survey found small businesses are still struggling to access the cash they need to keep their firms running smoothly, with 73% of those surveyed revealing they find the application process to be overly ‘long and painful’. Despite figures showing that cashflow is
responsible for up to 90% of small business failure, smaller British SMEs are struggling to access cash to support their working- capital needs. These statistics directly correlate to recent
figures from the British Bankers’Association that show a dip of £1.6bn in business borrowing from banks in February 2017, as smaller SME owners fail to find funding options that suit their individual needs from traditional lenders. Indeed, our results show just 17% of respondents choose their bank as the first port of call for funding. The revealing statistics make a clear case
for a continued push for better access to funding for British SMEs, but also highlights
June 2017
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the barrier that many smaller businesses – particularly those with a less than perfect credit score – are experiencing when they seek cashflow solutions.
Uncertain and unprecedented The SME market is facing uncertain and unprecedented times, and our research shows us that matters are being made worse for a proportion of businesses that are struggling to access funding via traditional routes. It is a fact of life for companies that cashflow is a fundamental requirement, and obtaining a simple short-term funding solution should not be a stressful undertaking. It seems even more astounding when you
consider the value of SMEs to the UK economy and workforce. According to the Federation of Small Businesses, small firms accounted for 99.3% of all private-sector companies at the start of 2016, and 60% of all private-sector employment in the UK. For many of our customers, just such an
injection of cash can be their saving grace, helping to take the pressure off and allow them breathing space when times have become tight. Faced by difficult questions and forms
The reforms introduced with the start of the new tax year – the introduction of the apprenticeship levy, an increase to the national living wage, and rising business rates – have all contributed to a general atmosphere of upheaval
requiring years of backdated evidence of operation, they might find themselves in unnecessary dire straits when flexibility and a personal touch in the decision process is all it really takes to get a ‘yes’ to funding that is so desperately needed. Regardless of where firms seek funding,
we like to think that a more constructive, collaborative approach which gives sound, good businesses a little peace of mind, is what is needed to drive some confidence in the market. CCR
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