The majority of small- and medium-sized enterprises (SMEs) are looking for a cash injection and over a tenth said crowdfunding is their preferred finance option, a report has revealed.
Bibby Financial Services’ annual SME Confidence Tracker survey of 500 UK SME owners and decision makers has found that 81 per cent would consider some sort of cash injection from external sources to support their business.
12 per cent said they planned to choose crowdfunding as their primary way to raise funds this year.
The top three options were: business loans (34 per cent); credit cards (30 per cent); and overdrafts (29 per cent). This was followed by government loans (21 per cent), invoice finance (19 per cent), private equity (14 per cent) and asset finance (13 per cent).
Almost two-fifths (15 per cent) of companies rely on external finance to support their operations and 17 per cent have a frequent need for external finance because of substantial cashflow challenges.
Over a quarter (28 per cent) of SMEs said external finance is not critical but that they use it to enable business growth and provide smooth cashflow. In the manufacturing industry, over a third (34 per cent) of businesses said this is the case.
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The report also found that the majority of SMEs (82 per cent) now feel confident about their prospects this year, 38 per cent – or 2.1 million – describe themselves as ‘just about breaking even’.
SMEs are most concerned by inflation (42 per cent), conflict in Europe (37 per cent), supply chain disruption (33 per cent), ongoing challenges from the pandemic (33 per cent) and cashflow (26 per cent).
“UK businesses face a heady cocktail of issues that threaten to impact growth forecasts for 2022 and beyond, including soaring inflation, skills shortages, and a cost-of-living crisis not seen on such a scale in the 21st century,” said Derek Ryan, UK managing director of Bibby Financial Services.
“While our report highlights a stoic resilience amongst the UK SME community, many are still struggling to keep their heads above water and operating on a day-to-day basis, rather than looking ahead to growth.
“SMEs faced the pandemic with fortitude and now they must continue to adapt and change to carefully manage the rising costs of doing business.
“It’s evident that cashflow challenges and payment issues continue to plague businesses, and it’s now more important than ever that they have access to working capital to support day-to-day operations, and to repay debt taken on at the height of the pandemic.
“But they cannot succeed alone; it’s critical they receive support from the private and public sectors, and we’d urge policymakers to closely look at wider tax cuts and energy grants to help SMEs and to ensure they continue to play a pivotal role in the UK’s economic recovery.”