Business ramping up in Yorkshire as SMEs actively seek future funding
Established SMEs across Yorkshire appear not only to be recovering but positively expanding, according to new data from specialist SME bank Allica. The bank reports that 46% of Yorkshire SMEs are set to apply for funding to fuel expansion and diversification in the remainder of 2021 and into Q1 of 2022.
After an unprecedented year of downturn in 2020, businesses in the area have rebounded well as trade returns to pre-covid levels. Across the board, the average amount of funding business owners are applying for in the Yorkshire region now stands at £163,768 – a considerable amount when compared to an average of £94,116 in 2017.
The reasons behind businesses seeking extra finance also highlights a growing trend of expansion: over a quarter (26%) are borrowing to fund new equipment, with another 24% looking to use funding to buy or upgrade their premises.
Allica Bank’s research also revealed investment in areas that would traditionally be cut during times of economic downturn. Recruitment was cited by 20% of businesses as a cause for applying for funding, while sales and marketing accounted for 13%. Only 23%, less than a quarter, of businesses are looking for funding to support cashflow.
The pandemic has also created greater opportunity for expansion across Yorkshire, with 47% of SMEs saying they have seen more corporate premises come available, with 42% believing this will enable them to expand quicker and secure better deals on business and rental rates.
However, there is a significant number of businesses struggling to secure funding from their banks. Over two-thirds (69%) have recently been rejected for funding, leading to 35% believing they will require a combination of lenders to meet their funding requirements within the next 12 months.
Katie Roberts, from Allica Bank’s Yorkshire relationship management division, says the figures paint a picture of a healthy SME market: “While there are still some challenges, this appetite for expansion, in the wake of such a significant impact on trading last year, shows impressive resilience.
“Yorkshire lost a significant number of businesses in 2020 – something we must do our utmost to avoid again in 2021/22. The fact that over two-thirds of respondents have recently been rejected for funding is a worrying sign, though it reiterates the crucial role of bank’s such as Allica whose central focus is providing SMEs with relationship managers who give them access to financial expertise and ultimately empower them to succeed.”
