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Peer2Peer Finance News | September 26, 2017

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Most UK SMEs struggle to access finance

Most UK SMEs struggle to access finance
Marc Shoffman

MORE THAN half of UK small- and medium-sized enterprises (SMEs) have struggled to access traditional finance for growth and are seeking alternative routes, a new study has revealed.

Research commissioned by financial services giant American Express found that 60 per cent of UK SMEs struggling with cashflow have difficulties paying suppliers on time.

57 per cent of UK SMEs struggle to obtain finance, so 54 per cent rely on existing working capital, 48 per cent use bank loans and 37 per cent look to private equity.

Many are also looking to non-bank sources such as crowdsourcing and credit cards to gain access to capital needed to grow, according to the study.

Read more: Opportunity for lenders as SMEs outside of London struggle to access finance
Read more: SMEs struggle to access finance as banks don’t meet their needs

The research, carried out among 3,200 senior executives and decision-makers in SMEs across 15 countries, found 58 per cent of firms across the world expect significant revenue growth over the next 12 months

Half of UK SMEs anticipated revenue growth of at least four per cent over the next 12 months, while 16 per cent anticipated growth of at least eight per cent.

Economic uncertainty in their home market was seen as the largest threat to their business, both globally and in the UK. Domestic political uncertainty was a further concern for 28 per cent of UK SMEs.

Despite the uncertainty, SMEs globally and in the UK are focusing on growth and expansion strategies to improve their financial performance, with 43 per cent of UK SMEs saying expansion into new domestic markets will be a top priority for their business over the next three years.

Another 33 per cent said that growing their share of current markets a key focus.

“It’s very encouraging to see this evidence of optimism and self-confidence among UK SMEs,” said Jose Carvalho, senior vice president of global commercial payments Europe at American Express.

“Businesses are deftly navigating through challenges and this resilience is helping them to thrive.”

He said it was important there is finance available for SMEs wanting to grow.

“The research shows SMEs are focusing on expansion and growth opportunities, reaching out to new markets and customers at home and globally”, Carvalho added.

“However, it’s clear these enterprising businesses often find it difficult to access the finance they need to invest, and as a result they’re looking beyond traditional sources to secure funds to enable them to thrive and grow in the long term.”

Read more: One in five SMEs turn to P2P loans to fund growth