Small business bank accounts looking for funding

A recent business owner survey discovered that as many as two out of every three small business bank account holders are looking for funding not from the high street but from their own savings accounts.

The new report, which was published by Bibby Financial Services after interviewing some 450 business owners, says that the number of small business owners who eschewed business loans for their finance needs rose by 11 per cent in comparison to last year’s figures.  The invoice finance specialists was not the only group that found evidence of SMEs scaling back on the use of credit, as the FSB found that only 35 per cent of its members made use of an overdraft facility last year, a drop of 40 per cent when held up against 2011’s overdraft use.

Access to credit has been particularly tight ever since 2008, when the Northern Rock bank run kicked off the credit crunch and resultant economic downturn.  High street retail banks have been reticent to increase lending levels for small businesses, with the final result being that the ‘Big Five’ high street banks all missed their SME lending targets as set by Project Merlin last year, with the collective £76 billion pledged to small businesses was missed by a total of £1.1 billion.

It has proven practically impossible to coax banks to provide adequate finance in order to meet growth targets, Prism Total IT Solutions’ Gary David Smith said.  Due to a lack of capacity, many SMEs in the UK simply cannot grow as they should, and it is only in very exceptional circumstances when a business owner will find providing working capital from their own personal savings a sustainable enterprise, Mr Smith added.

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