Small Businesses Return to External Finance

‘Larger’ and ‘ambitious’ small firms are most likely to use external finance such as loans or overdrafts to help their business develop

Small Businesses Return to External Finance

Small businesses are increasingly returning to external sources of finance such as overdrafts or loans, according to a report by BDRC Continental.

An analysis of 100,000 small enterprises since 2011, the study found that whilst use and demand for finance remained stable overall in 2015, 70% of small businesses are more likely to use external finance – up from 65% in 2014.

25% of the small enterprises surveyed said they plan to take advantage of external financein the future, up from just 21% in 2012.

‘Larger’ and ‘ambitious’ small businesses and those with younger managing directors were found to be most likely to use external finance to help their business grow.

Last month, it was revealed that, despite a rise of 84% in 2015, the overall rate of growth of the alternative finance market is slowing down.

Shiona Davies, director at BDRC Continental, said:

“Our analysis points to a return to external finance amongst the larger, more ambitious small businesses, such as those that have plans to expand by 20% or more.

“There will always be a portion of businesses that don’t want to use external finance, but it looks as if the number of these, which reached highs in 2015, may be starting to reduce.”

To find out more about how to raise external finance, click here.

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