'Fear of funding' threatens UK businesses

Almost half (48%) of SMEs believe British businesses are missing out on opportunities because of a reluctance to borrow, new research claims.

A survey published by Ultimate Finance revealed that 27% of SMEs were holding back the growth of their own business due to a fear of funding, despite 45% of them being concerned that the economy is being stifled as a result.

However, this aversion to borrowing is not due to a lack of awareness, with 57% of SMEs claiming to have a good understanding of the finance options on offer to them.

“It’s not good news for the UK economy if SMEs understand the benefits of borrowing, yet do not seek the funding that could have a positive effect on their operation,” said Ron Robson, CEO of Ultimate Finance (pictured above).

“In many ways, it’s not a surprise; years of economic instability – which preceded Brexit – has led to a general uncertainty on ‘what next’.”

Just under half (47%) of respondents believed external funding could result in a loss of independence.

Meanwhile, some 37% felt that borrowing was too risky in the current climate.

“The bigger challenge to tackle is that SMEs have a fear of funding and are not seeking finance when they need it,” added Ron.

“This is contrary to messages that lenders aren’t lending, which is simply not the case; borrowing figures are down due to demand.

“This mixed communication is contributing to confusion and takes attention away from educating SMEs about the positive impact borrowing money can have.”

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