A member of the UK200Group looks at why SMEs are still struggling to access finance
A member of the UK200Group of independent accountancy and law firms has commented on a new study that shows that SMEs are still struggling to access finance.
The research conducted by GLI Finance and Cambridge University Centre for Alternative Finance has shown that 80% of lending to SMEs is still only provided by just four traditional UK banks and that 56% of the SMEs surveyed said they were unfamiliar with any forms of alternative finance.
The report concludes by saying that SMEs are responsible for 65% of job creation and therefore the economy could sustain £20bn in losses by 2020 as traditional lenders continue to withdraw funding.
Jonathan Russell, partner at UK200Group member firm ReesRussell, said:
“The lack of understanding about small business has always been a problem and will probably continue to be so, as authorities and their advisors continue to think small businesses are just smaller versions of large businesses.
“The lack of affordable and accessible finance continues to be a problem and in particular those businesses which require larger amounts of working capital – more often the manufacturing businesses, which by tradition tend to be those in the north of the country.
As the main stream banks continue to be risk averse and see all small businesses as risky, the funding issue will continue. Whilst a lack of understanding by small business of alternative forms of finance, means even these often will not provide a solution. The issue of government assistance is usually that the bulk of the funding gets skimmed away by professional advisors and doesn’t ever reach the true areas of need.”
