A Third of Small Tech Businesses are Seeking Finance to Accelerate Growth
Traditional funding remains the main source of finance for small and mid-sized technology firms
Small and mid-sized tech businesses displayed optimism in a recent survey of 500 business owners, with 32% admitting they plan to seek finance in order to meet growth plans.
Traditional funding is still the preferred route, with 42% accessing capital through a finance institution last year and 41% doing so via the bank.
Other finance solutions named in the survey, which was conducted by accounting group Crunch, included private investors (26%); crowdfunding (16%); family and friends (13%), and government grants and support schemes (9%).
However, while firms are keen to borrow, institutions are still reluctant to lend. 42% of the firms who applied for capital through financial institutions were denied investment, as were 25% of the companies who tried banking institutions. In regards to the other finance options listed, private investment also rejected a quarter of applicants, friends and family denied 10%, and 11% were unsuccessful in government funding applications.
Darren Fell, the managing director of Crunch Accounting, commented on the findings:
“This research proves what many small and medium enterprises have long understood – the business climate is changing and the tech industry in particular is looking to grow.
“However, without the proper lending support from banks and financial institutions, it’s almost impossible for small companies to meet their true potential.”