A large number of small and medium transport businesses are anxious they will be refused further funding by the bank.
The figures are from the Close Brothers Business Barometer, which draws on the Global Market Insite survey. The survey, which canvasses more than 700 SME owners and senior managers on a range of economic and financial issues, shows that 66% are concerned about approaching a bank.
John Fawcett, Managing Director of Transport Division at Close Brothers Asset Finance, said, “Our research shows that 16% of transport firms surveyed have been declined access to bank funding over the last six months, so the fears businesses have are not unfounded.”
Although there is a sense of trepidation among SMEs, more than half did mention that they would be looking to apply for further funding over the next 12 months, which Fawcett sees as an encouraging sign for the sector, although is quick to point out that there is a growing concern among business owners over securing funding from banks (which was 10% higher in the first quarter of 2014 compared to the third quarter in 2013.)
“It is encouraging that many firms are planning for growth and seeking investment, but unless they can get access to funding it will be difficult to realise their ambitions,” he adds.
“To successfully build long-term development plans, companies will require greater access to working capital. It is important they understand and explore the alternatives available to bank lending, especially if they fear being turned down.”
The research also showed that two-fifths of owners admitted not having enough understanding about alternative finance sources, while 12% had no idea there were any other options available to them.
Something the Confederation of British Industry (CBI) feels is imperative as it feels that SMEs rely too heavily on the banking sector for funding.
Katja Hall, Policy Director at the CBI, says, “The UK’s small and medium-sized businesses are the backbone of our economy so ensuring they can access the capital they need to grow and create jobs is critical.
“Banks will continue to be a vital source of finance but it’s not a one-size-fits-all solution, and we’re encouraging growing firms to open their eyes to the broad range of funding options on the market.”
Asset finance is becoming a popular source for alternative finance, says Fawcett, which enables businesses to either purchase new assets or to release capital tied up in existing assets in order to finance their development or growth plans.
“It takes physical assets and makes them work harder, providing greater financial freedom for businesses,” he says. “However, many businesses remain unaware of how it can help them to achieve their potential.”
