The Department for Business Innovation and Skills has published its Small Business Survey (SBS) 2014. The document indicates an improving environment for SME’s largely coinciding with the improving economy. There is one area though that indicates a greater need for outreach and education by investment crowdfunding platforms. Under the area of access to capital, new forms of finance are still largely under-utilized if you extrapolate from this report.
The SBS survey was conducting from July to October of 2014. Over 5100 small enterprises were contacted by phone and polled for their answers. The small businesses are defined as employing 250 people or less. A wide range of issues and topics were covered and many indicated improving results for the SME world.
In regards to access to finance, 19% of SMEs had sought finance in the preceding 12 months. Forty-eight per cent of the SME employers that sought finance in the previous 12 months applied for bank loans. Twenty-one per cent applied for bank overdrafts, 12 per cent for grants. Of the businesses applying for finance, thirty-nine per cent of those that applied for finance had some form of difficulty getting the money from the first source they approached. Thirty per cent were unable to obtain any finance, four per cent obtained some finance but not all they needed, and six per cent obtained all they needed but with some difficulties. It is noted the proportion that experience any difficulty did decline since 2o12. For those who were challenged in accessing capital 48 per cent of those that applied for bank loans had difficulties, with 39 per cent being unable to gain any finance from the first source.
The authors state that “the proportions of SME employers seeking alternative methods of finance such as crowdfunding, equity, and mezzanine finance remain very low”.
As uncovered in the recent report published by Cambridge University, new forms of finance such as direct lending and crowdfunding are growing dramatically. But the challenge remains for these new portals to promote and educate SME’s on their options today.
The report is embedded below.
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