SMEs shun big banks for funding

Businesses in the UK are shunning traditional overdraft and loan facilities from the high street banks according to in-depth nationwide study.

The SME Finance Monitor, which is funded by the high street banks themselves, shows that 50% of small and medium-sized companies describe themselves as “permanent non-borrowers” which is up from 33% from 2012. Indeed, only one in three SMEs are intending to borrow to finance growth which is down from half in 2015.

The research highlights serious concerns from businesses both in terms of their funding options and their perception of the high street banks’ ability to provide the support they need.

“Whilst in headline terms the high street banks continue to support SMEs, the reality is that many are not planning for significant growth and are seeking more flexible and immediate support.” Explained Dave Ottley, Managing Director at independent commercial finance broker Balance for Business.

He continued: “In the last 3 months we’ve seen a 200% rise in applications and we’ve secured more immediate cash flow funding to support HMRC repayments and overdue invoices. The feedback we are getting is that lukewarm responses from high street banks for funding in the £5000 – £100,000 bracket are no good to SMEs who can wait weeks for decisions and cash.”

The research for the SME Finance monitor was conducted by BDRC involved 130,000 interviews since 2011.