Technology SMEs are planning to expand in 2015, with a third (32%) of small IT companies planning to apply for funding in the new financial year to meet growth plans, finds a new survey from online bookkeeping service Crunch
Traditional funding methods remain the most popular avenue amongst SMEs, with 41% of business owners applying to banks and 42% applying to a finance institution, such as the First Enterprise Business Agency or regional community finance institutions.
Crowdfunding was the solution for 16% of businesses, while 26% turned to private investment, including angel investors and venture capital investment. Less popular funding routes included private investment from family and friends (13%) and Government grants and support schemes (9%).
But while the results show business optimism is high, financial institutions are still far from relaxed about lending. Of the SMEs that applied for funding in the last 12 months, a quarter (25%) of applications were rejected by banks and 34% were rejected by financial institutions.
Private investors, including venture capitalists turned away more than quarter of all applications (26%), family and friends rejected 10%, while 11% of businesses were unsuccessful when applying for government grants and schemes.
MD of Crunch Accounting, Darren Fell noted, “This research proves what many SMEs have long understood – the business climate is changing and the tech industry in particular is looking to grow. The success and extension of the Startup Loans scheme shows that many entrepreneurs out there are looking for funding. However, without the proper lending support from banks and financial institutions, it’s almost impossible for small companies to meet their true potential.”
Crunch Accounting is the UK’s first and fastest-growing online accountant, combining a team of expert in-house accountants available on-demand with simple online accounting software.