Over a quarter of 500 SMEs surveyed felt their banks didn’t support them, with 30% of businesses turning over less than £1m feeling unsupported.

The survey, which was conducted by YouGov, also found that SMEs were in the dark in regards to their notice period for business overdrafts, with 40% claiming their banks had to give them at least a week’s notice or didn’t actually know what the notice period was.

Chirag Shah, CEO of Nucleus Commercial Finance, said these results weren’t unexpected as although banks don’t need to give any notice before removing a SMEs overdraft, this is not often made clear.

“Businesses work this source of unsecured funding into their budgets and rely on their overdrafts to plug working capital gaps on a month-by-month basis.

“The fact that a three-month overdraft notice period was the most popular answer suggests many SMEs have a shock coming further down the road when this lifeline disappears.”  

Chirag added that banks were reluctant to make this type of unsecured lending available and the Basel III – a global, voluntary regulatory framework on bank capital adequacy, stress testing and market liquidity risk – required them to acquire more capital meaning as SMEs are often their least profitable and therefore lowest priority business customers.

“That small businesses don’t feel supported isn’t a shock: according to figures from the Bank of England, SME lending via overdrafts alone has fallen almost £8.5billion in four years.

“In fact, the latest BBA figures show that in Q1 this year, banks approved £6.1bn of new SME loan and overdraft facilities. This was 18% lower than in the same quarter last year. It’s a worrying trend for SMEs.”

Nucleus also revealed that 31% of SMEs were concerned that Brexit would make it harder for them to secure funding.

“With the current financial uncertainty it’s not surprising SMEs felt business funding might be harder to come by,” Chirag added.

“Banks were major beneficiaries of the UK’s EU membership. Our withdrawal will potentially make it harder than ever for SMEs to secure finance from them – all this at a time when many SMEs will need liquidity to ensure they stay afloat.

“It’s more important than ever that they assess all their finance options to ensure the future success of their businesses.”