UK Small Businesses Sitting on £770bn in Untapped Assets
Small and medium sized firms own £770bn in untapped assets – equivalent to 48% of the UK’s GDP
Research by Lloyds Bank Commercial Banking also found that SMEs are owed £291bn in outstanding invoices that they could use to fund future growth.
The bank has found that fewer than 10% of small firms have used invoice financing as a form of lending in the past 12 months, despite the fact that they are becoming more confident about investing in future growth.
Donald Kerr, Managing Director of Lloyds Bank Commercial Finance, said: “Our research found that more than half (52%) of SMEs are more confident about investing in growth this year than they were 12 months ago.
“Despite this, SMEs are missing out on the opportunity to recruit new staff, break into new markets or develop new products because they are not harnessing the full range of funding options available that could unlock the value in their assets or invoices to help them grow.
“As a result, businesses are turning down contracts that they think they cannot afford to fund and are holding back their own growth potential.”
Asset-based lending has been used by even fewer firms, with only 5% having used it in the past 12 months. This is in contrast to the 24% who have used an overdraft in the past year, and 32% who have taken out a loan.
Donald Ferr added: “ …despite the fact that even the average SME is owed almost £60,000 in unpaid invoices – and that for one in nine (11%), those outstanding bills are worth more than £200,000 – even those businesses who are aware of different finance options appear not to understand them enough to take advantage of them.
“Unless businesses start looking at potential solutions like these more seriously, both they and the UK’s recovery overall are likely to be held back.”