80% of Small Businesses Successful in Acquiring Finance
Funding optimism up as a third of small businesses plan to apply for finance next year and focus shifts from survival to growth
80% of small and mid-sized businesses successfully received funding this year, according to the latest research conducted by Albion Ventures, increasing from 71% in 2013.
However, despite the 9% increase in success rates, the research found that the number of small and medium firms applying for finance had dropped from 17% to 10% this year. The findings also revealed a wider shift in focus for small businesses from survival to business development, demonstrating a “healthier business environment” – with a focus on growth.
27% of businesses raised finance to develop their businesses and an additional 23% to expand their premises – up from 5% last year. Additionally the number of small and mid-sized businesses acquiring finance to fund working capital dropped from 32% to 24% this year.
Conducted with 450 UK small businesses, the survey was commissioned to investigate the potential challenges facing growing businesses – and highlighted a growing demand for funding in the next 12 months with 33% of businesses planning to apply for finance in the next year The number of businesses turning to alternative finance routes was also noted with the rate of businesses relying on bank finance falling 14%.
Albion Venture managing partner, Patrick Reeve, commented on the report – contributing much of the positive change to the emergence of ‘threshold’ businesses:
“Not only have firms been more successful in applying for finance but their motivations are more about growth than funding working capital.
“Demand for finance is particularly strong among the growing band of so-called ‘threshold’ businesses with turnovers of between £500,000 and £1m, which are on the cusp of becoming established companies.
“Twice as many of threshold businesses attempted to raise finance in the past 12 months and 68% of them needed capital to grow compared to 41% of other types of small businesses.”