West Midland SMEs struggling with alternative forms of finance
ALMOST half of firms in the West Midlands are planning on seeking funding for growth in the next 12 months, a study has concluded.
However, the majority of these are still concerned their request for bank funding will be turned down, leaving them uncertain about where they will secure the growth capital.
The figures for the region are in line with other areas of the UK, according to the Close Brothers Business Barometer.
The quarterly survey, which canvasses the opinion of SME owners from a variety of sectors across the UK, is meant as a guide to show how SMEs intend to fund growth.
The results show 46.1% firms in the region questioned as part of the study intend to seek funding during the next 12 months (UK average: 42.2%) but of these, 54.3% are unsure how to access the funding (UK average: 54.9%).
Excluding Greater London, firms in Yorkshire and Humberside are the most likely to seek growth capital (50.7%), followed by the North East (48%), then the West Midlands. Just 33.3% of firms in the East Midlands plan on asking for cash, with the North West not far behind at 34.9%.
Of these, two-thirds (66.7%) of firms in the North West are unsure where the funding will come from, with Yorkshire and Humberside trailing not too far behind at 63.2%.
The study also found that 43% of business owners surveyed in the West Midlands admitted their knowledge of funding sources other than the conventional could be better, while a further 11% said they were completely unaware of any alternatives to bank lending.
Mike Randall, CEO of Close Brothers Asset Finance, said: “It is encouraging to see that so many firms in the West Midlands have plans to invest in their business, but to make these plans a reality firms need to have the necessary working capital required for growth.
“For many, accessing finance can seem like a daunting task if they perceive that banks aren’t willing to lend and applications are likely to be turned down. However, our findings would seem to suggest that firms are not being pro-active enough when it comes to financial planning and many are failing to seek appropriate alternatives to bank lending.”
The Business Barometer highlighted that access to cash is still a major challenge for many businesses in the region; with 17% of local business owners surveyed claiming it is crippling their business.
“We would urge businesses to widen their search and consider other means of funding to help them achieve their potential. Business owners need to explore the broad range of financial solutions available to them,” added Randall.
“Over the last few years, asset finance has become increasingly popular, however there is still a lack of awareness surrounding it that may be holding firms in the West Midlands back from realising their growth aspirations.
“Asset finance is a flexible form of funding that allows firms to unlock the capital tied up in their existing assets so that it can be used to facilitate their expansion strategy.”
