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Lack of bank finance leaves SMEs struggling to stay open

Daniel Liberto

Despite a recent slew of positive economic data coming out of the UK, research from borro, a personal asset lender, suggested that a lack of funding from banks has meant many SME owners are struggling to stay afloat.

According to the survey of 310 SME owners, 16 per cent sought additional external sources of finance in the past year, yet out of this group 40 per cent said their requests were rejected.

This lack of external help meant 7 per cent of respondents reportedly missed making tax payments and 4 per cent were forced to make redundancies.

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The survey also revealed that some SME owners were now looking at alternative ways to raise extra business funds.

A third said they would be willing to sell business assets (34 per cent), while 36 per cent considered borrowing against business assets like property or invoices and 14 per cent had contemplated releasing capital from their homes.

Paul Aitken, chief executive and founder of borro, said: “It is a sorry state of affairs to see the financial pressures of running a business, such as meeting suppliers’ costs and paying tax bills, meant business owners contemplated putting their homes on the line.”

Adviser view

Adam Carnall, financial adviser for Derbyshire-based Andrew Stewart & Co, said: “As someone who has also been seeking finance to help expand the business, lenders or banks expect you to go to the moon and back to get lending. So the finding that people are considering remortgaging their houses to get access does not surprise me. It’s a sad and sorry state of affairs if perfectly healthy businesses are considering selling because they can’t do what they wish to.”