SMEs putting personal funding and asset finance ahead of traditional bank funding

SMEs in the West Midlands are opting to use personal funding and asset finance ahead of traditional bank funding, according to new research.

The latest quarterly Close Brothers Business Barometer, which canvasses the opinion of SME owners and managers throughout the UK, showed that over a fifth of firms in the region depend on personal finance, making it the most commonly used method of business funding.
 
Of the firms polled, 15% said they relied on bank loans while a further 15% prefer to use a bank overdraft.
 
The survey further showed that asset finance has become as popular as traditional forms of finance with 15% of the firms responding to the survey using it as their main form of funding.
 
Commenting on the figures, CEO of Close Brothers Asset Finance, Mike Randall said: “It’s interesting to find that so many SMEs in the West Midlands are relying on personal finance to fund their business given that bank lending was traditionally the main source of finance for most companies and there are so many other viable ways to fund your business without drawing down on your own finances.
 
“We further found that many firms in the region are opting to use asset finance, signalling a shift in SME attitudes towards finance which appears to be moving away from traditional reliance on bank lending.”
 
The Business Barometer also revealed that 46% of West Midlands SMEs consider accessing finance to be a challenge and as many as two fifths are not confident that they will be able to access the funds they need for investment in the next 12 months.

The figures tend to bear out recent comments by the Black Country Chamber of Commerce that many firms in the area still don’t want to do business with the big banks because they find negotiations difficult.
 
Randall added: “These figures clearly show that access to finance remains one of the main challenges facing SMEs in the West Midlands. We would urge all businesses to widen their search and consider all the means of funding available to them.
 
“Asset finance is a sustainable and flexible form of funding that allows firms to either purchase new assets or unlock the capital tied up in their existing assets, providing a cash boost that can be reinvested back into the business.”