West Midlands firms ‘lack basic understanding’ of finance options

THERE is a widespread lack of awareness among SMEs in the West Midlands as to the type of finance options available to them when looking to expand their operations.

Firms need additional help in order to navigate the various options, the Greater Birmingham Chamber of Commerce has said.

The move follows the findings of a new survey conducted by the chamber asking firms for their understanding of the various funding options available.

The survey showed that 41% of respondents were unfamiliar with private equity finance, while 57% and 50% respectively were not aware of peer to peer lending and crowdfunding.

Meanwhile, 76% were not familiar with Mezzanine and 58% were unaware of Angel. By contrast, the survey found that the vast majority of respondents were familiar with better known forms of funding such as credit cards, bank overdrafts, bank loans or leasing/hire purchase.

When asked about Government schemes, 68% were unfamiliar with or unaware of UK Export Finance while 72% were not aware of the Enterprise Finance Guarantee.

Chamber chief executive Paul Faulkner said the complex array of funding packages available – including peer to peer lending and crowdfunding – had increased the need for expert guidance.

Mr Faulkner said: “Knowing which type of finance is best for your business has become increasingly complicated in recent years as new platforms such as peer to peer and crowdfunding have emerged. Navigating the changing field of public sector grants and funding can also be a challenge.

“The results of this survey show that many businesses still need additional support getting up to speed on the types of finance out there.

“I would urge the businesses to consider contacting their local growth hub for signposting support on access to finance.”

Andy Lyndon, director of LDC in the Midlands, said: “Access to finance is an issue for many businesses, and with so many options available it’s important for management teams to fully explore what’s on offer to ensure they have the right strategic fit for their business.

“Despite common misconceptions, private equity isn’t just for big businesses. It can be a powerful tool for management teams of all sizes, creating a partnership that works hand-in-hand to create stronger, larger and better businesses.

“We’ve seen how effective it can be with businesses here in the Midlands, delivering lasting value for our portfolio, including manufacturer Eley Group and the UK’s leading live exhibition and conference venue, the NEC Group.”