By Claire West

The annual Credit Check survey by Venture Finance,finds that almost two thirds (60%) of UK accountants say traditional bank finance is still barely available to UK SMEs.

A fifth (20%) of accountants’ clients saw traditional funding withdrawn or conditions changed during the recession and over half (57%) of accountants say clients are still plagued by cash shortages.

Nowhere to turn
Asked about different sources of finance, accountants state that unsecured company loans are barely available or unavailable to eligible businesses. Almost a third (30%) also believe that business angels are now less accessible as a source of funding.

Only 17% believe business loans are available and under a third (31%) consider the EFG to be accessible to eligible businesses, despite accountants reporting that these financial sources remain attractive to clients.

Peter Ewen, Managing Director of Venture Finance, says: “The recent £1.5 billion growth fund for small businesses, set up by a group of British banks, is a welcome development. But there is clearly work to be done, with accountants indicating their clients have limited options to help them capitalise on the upturn.”

The wrong finance for growth
According to the survey, 40% of accountants believe the opportunities to finance growth in the current economic environment do not match their clients’ plans for expansion, and over half (54%) believe SMEs are using the wrong type of finance for sustainable growth.

As a result of decreasing availability, 80% of accountants have seen their clients lose faith in traditional finance sources. Almost two thirds (62%) also believe reliability and personalised service to be more important in a lending relationship than cost alone.

Peter Ewen says: “In the new funding landscape, it is clear businesses need to re-examine their financial ‘menus’ and focus on the options that are going to help them meet the recovery with strength. Trust, sustainability and reliability should all be key considerations for SMEs seeking finance today.”

A new menu of finance
When asked about the best finance for SME growth, over half of accountants (53%) recommend Invoice Finance — with 85% stating that it was either available or readily available to eligible businesses. Accountants also highly recommend Asset Based Lending, venture capital and private equity as other options for sustainable growth finance.

“Business finance will not return to its pre-recession state any time soon, so SMEs need to work to understand the best financing options for growth today. They need to look beyond the traditional methods to the wider funding landscape,” adds Ewen.

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