The hindering factors of SME access to growth funding

By Danielle Wilson, head of partner acquisition at Liberis

Research from Liberis, a leading provider of business cash advance, has revealed that over half of UK businesses are unable to access all of the funding they need to grow, with the main hindering factor being a lack of education or understanding of their funding options.

The lifeblood of the UK economy, SMEs are forecast to contribute over £215bn by 2020. Yet, without a vital cash injection and much-needed support from providers, this vision could be severely stinted.

With these ambitions and potential obstacles in mind, Liberis has spoken with 200 SMEs to find out more about their relationship with business finance: why do they need it, and can they access it when needed?

The research found that 62% of respondents said they need funding to grow and expand, while 22% of businesses require funding to maintain business as usual and 5% to survive past the first year of business.

Looking closer, the findings showed that the small businesses most committed to growth tended to be businesses younger than 10 years; most commonly restaurants, cafés, and health and beauty businesses. This may be due to new technologies developing in these sectors, presenting businesses with the refreshed opportunity for growth and access to customers.

However, despite the demand for business finance, 57% of SMEs were unsure which provider to obtain funding from and only 35% of business owners stated that they felt confident that they would be accepted when applying for additional finance.

Hindering growth opportunities, such a lag in SME development may in turn negatively impact the economy. And so, small business education – from banks, alternative providers and influencers – is desperately required to increase awareness levels of the process, greatly benefiting both businesses and economy alike. Such movement has been demonstrated in recent reports from the British Business Bank, in which the UK government-backed organisation pledges its dedication to a more targeted educational campaign on the topic of SME finance.

Rob Straathof, CEO at Liberis, said: “These findings have opened our eyes to a lack of confidence and awareness among SMEs in how to correctly secure the funding they so desperately need. Funding will continue to be a hot topic for the small business community, but urgent action and collaboration is crucial to prevent resulting damage to the UK economy.

“Without sufficient financial education and support the UK’s business ambitions will be severely affected, but by ensuring they have the correct financial understanding, we can help secure and strengthen their livelihood, fast-tracking their ambitions.”