Small Businesses Failing to Make Use of Funding Incentives
AXA report reveals lack of knowledge is preventing small businesses accessing alternative finance options and government incentives
In a report conducted by insurance firm AXA, data revealed that whilst 12% of small and mid-sized businesses accessed funding in 2013; only 5% used funding and lending schemes, with only 7% making use of government loans and 6% getting financial aid by means of Enterprise Investment Schemes (EIS) or Seed Enterprise Investment Schemes (SEIS). These numbers contrast with the larger statistics for businesses seeking finance through more traditional methods, with 44% relying on overdrafts, family and friends, and credit cards; and 20% taking out bank loans.
With most of the small and mid-sized businesses surveyed looking to expand in 2014; and almost half planning to invest in new equipment and resources to facilitate growth – 60% of participants stated that they planned to apply for funding to gain extra finance to do so.
However, with 80% of respondents confirming that they did not understand government loans and investment schemes and only 20% having any knowledge of crowdfunding and 30% of peer-to-peer lending, results indicate that small firms still don’t have access to sufficient information to encourage them to seek alternative lending or make the most of incentives.
Most small business owners did not know or fully understand incentives such as incubators and accelerators and weren’t aware of funding changes in the Budget – with a third not knowing about tax allowances on investments this year.
AXA’s managing director, Darrell Sansome, addressed the lack of knowledge, urging a need for information covering financial assistance:
“We know from our customers that setting up a small business can be really hard work and that much of the admin and paperwork is very daunting. However there is help out there and we would urge government and all those with an interest in small companies to ensure that the promotion of support services is given suitable backing.
“All the little bits of help small businesses can get will make a big difference to their future.”