Welsh SMEs limiting their growth options with reliance on banks
A new survey has revealed that only 27% of the 93 Welsh businesses polled have considered a source of business finance besides a bank – 8% less than the national average of 35%.
The Welsh capital is only marginally higher than the rest of the country: only 28% of the 54 Cardiff respondents had considered alternative finance solutions, leaving well over 2 in 3 the city’s SMEs who hadn’t. The insights come from a new survey conducted by business finance provider Growth Street. The firm canvassed 2,006 employees and directors of British SMEs in January 2019, following up from its inaugural survey in 2018.
As hundreds of millions of RBS competition fund pounds are distributed to challenger banking brands, Growth Street’s findings shine a light on an underinformed business demographic in the Midlands.
Growth Street’s survey also highlights respondents’ reliance on banks, with 54% of Cardiff businesses stating that banks would be their first port of call when seeking new funding – 3% above the national average of 51%. Furthermore, nearly one fifth (17%) of respondents said they ‘do not know’ where they would go to seek funding.
This lack of knowledge is reflected in their low understanding of alternative finance solutions, where 38% of respondents said they had no confidence in their knowledge of finance outside the banks. This figure is significantly higher than in the UK’s other devolved administrations – Scotland (32%) and Northern Ireland (29%).
Across the UK more broadly, people’s understanding of alternative finance options is shown to be on the increase. 34% of respondents said that they were not at all confident in their knowledge of non-bank funding, significantly fewer than the 45% of respondents who attested to the same lack of knowledge in 2018. 66% of respondents had at least some knowledge of finance outside of banks, up from 54% in 2018.
Greg Carter, Growth Street CEO, comments:
“Welsh SMEs are lagging behind the rest of the UK on several fronts, from knowledge of finance outside banks to considering going somewhere other than a bank for their finance. The overarching lack of awareness in Welsh SMEs poses a serious challenge for banks and non-banks alike
“We must find a way to engage and educate Welsh businesspeople about alternative finance options if we are to tap into a market that will become increasingly important following Brexit.”