FORTY five per cent of Brits do not know where to turn for business funding, and 64 per cent do not have the financial means to support their business ventures, according to a new survey.
Just over a third (35 per cent) of Britain’s entrepreneurs would resort to personal savings if they wanted to start or grow a business, while 28 per cent would turn to banks, and 15 per cent would ask friends and family for funding. However, just five per cent would consider peer-to-peer lending as a viable option. In fact, more people are prepared to mortgage or re-mortgage their homes (nine per cent) or take out a credit card (seven per cent) than consider P2P solutions.
According to the research from crowdfunding platform Crowdfinders, this perceived lack of funding options is holding back Britain’s entrepreneurs.
“There has been a long-standing issue in the world of business that typically only entrepreneurs with deep pockets or wealthy friends and family can access the capital they need to start or scale-up their business,” said Luke Davis, co-founder of Crowdfinders. “The alternative finance revolution was meant to democratise access to funding; however, more needs to be done to connect entrepreneurs with potential investors so they no longer have to rely on personal savings or the bank of mum and dad.”
The survey found that young entrepreneurs are especially in the dark, with 52 per cent of 18-34 year olds saying that they would not know where to look for business funding.
The survey follows recent research which showed that since 2011 banks have withdrawn £5.7m a day in small business overdrafts alone, cutting available credit by £8.4bn. Last month, the government launched its “patient capital” review to help identify the barriers facing entrepreneurs who are held back by the inaccessibility of growth capital, and Chancellor Philip Hammond unveiled a series of new measures in last month’s Autumn Statement aimed at stimulating SME growth.
In response to the funding shortfall, Crowdfinders has launched its own pre-crowd investment platform which helps entrepreneurs generate the first 30 per cent of a funding round via its own network of investors.
“Not only does this early momentum dramatically increase the chances of a funding round successfully reaching its target, but the pre-crowd platform also ensures entrepreneurs can access scale-up investment without needing a network of wealthy contacts to get a business off the ground,” added Davis.