Brexit Fails to Dampen Confidence as Small Businesses Self-Fund

While many firms are turning their attention to alternative sources of finance, 8 out of 10 that actually do apply to banks get accepted

Brexit Fails to Dampen Confidence as Small Businesses Self-Fund

Small businesses have an increased desire to self-fund rather than opt for lending from traditional banks, according to a report by BDRC Continental.

Their quarterly SME Finance Monitor revealed that 36% of small businesses were using alternative sources of finance, such as retaining profits, credit balances or trade credit, by the end of Q2 2016 – with this figure increasing to 62% for firms that employ between 50 and 249 employees.

The number of ‘permanent non-borrowers’ reached 47% in Q2 compared to just 43% in Q4 2015 and 48% in Q1 2015.

This trend is in keeping with the lowering number of enterprises that applied for a new or renewed loan or overdraft facility, with this figure falling from 11% in 2012 to just 6% for Q2 2016.

The ability for businesses to continually seek finance, in such times of economic uncertainty, suggests the majority of small firms feel undeterred by the EU referendum result and Britain’s impending exit from the EU.

Among the larger businesses surveyed, just 16% viewed political uncertainty as a potential future barrier with 14% saying the same of the economic climate.

While many businesses are turning their attention to alternative sources of finance, 8 out of 10 that actually do apply to traditional banks get accepted

Shiona Davies, director at BDRC Continental, said:

“The Q2 report provides further evidence to explain the current lack of appetite for external finance amongst small businesses, and a preference for self-funding rather than any major concerns about being successful if they were to apply.

“Brexit has the potential to change the business context. For now, most small businesses are reporting ‘business as usual’ albeit there are signs of concern amongst some specific groups.”

1 Comment

  1. […] of U.K. small businesses that apply for a bank loan get accepted, according to the latest from BDRC Continental. The firm’s quarterly SME Finance Monitor concluded that, despite this promising statistic, more […]

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