Small Businesses Opt For Alternative Finance Over Traditional Funding Routes
Small firms are choosing personal and asset finance over bank loans and overdrafts as access to finance remains major growth challenge
Personal funding and asset based finance were the top two funding options used by UK small and medium enterprises last quarter as small firms move away from bank lending, according to the latest Close Brothers Business Barometer (CBBB).
The survey revealed that almost of quarter of small firms choose to use personal finance, followed by 17% who used asset finance to fund their business; compared to 15% of firms which used bank loans and 15% that used overdrafts.
Assess to finance continues to be a top issue for small businesses. 42% of respondents confirmed that raising finance is a challenge with an additional 10% of business owners admitting they were not confident in their ability to access the investment needed for growth in the coming year.
Commenting on the figures, CEO of Close Brothers Asset Finance, Mike Randall, said:
“It’s interesting to find that so many small and medium sized firms are relying on personal finance to fund their business given that bank lending was traditionally the main source of finance for most companies and there are so many other viable ways to fund your business without drawing down on your own finances.
“These figures clearly show that access to finance remains one of the main challenges facing the small and medium enterprise sector.”
For more information on alternative funding routes, check out Startups.co.uk’s raising finance section here.