New Businesses Almost Twice As Likely to Turn to Family and Friends for Investment than Established Firms
Small companies which have been running since 2010 are also more inclined to use peer-to-peer lending and to seek out business advice
Younger small and medium companies are more open to using alternative funding routes and to turn to g friends and family, than older, established firms; the latest Business Banking Insight (BBI) report has found.
The report, which featured over 5,000 firms, found that 42% of small businesses launched in the last five years would consider seeking finance from friends and family, compared to 22% of those launched before 2000.
Furthermore, 36% of ‘younger’ small and medium enterprises said they would use peer-to-peer lending for growth, while only 18% of more established businesses said they had considered the alternative funding method.
Younger firms were also found to be more likely to seek out business advice. The study revealed that 64% had turned to their friends and family for finance advice, 56% had used financial advice sites and 52% had used a mentor – compared to 45%, 32% and 29% of pre-2000 businesses respectively.
John Longworth, director general of the British Chamber of Commerce, added:
“The divide between older and newer companies in attitudes to seeking business finance and guidance highlights a change in approach by businesses’ to driving growth.
“The finance needed to drive growth can and should be tailored to the specific needs of each business, so it’s vital that traditional lenders and advisers adapt to meet the changing demands of small and medium firms.”