New research has revealed that almost a quarter of businesses in the South West may be missing out on access to finance simply because of fears about approaching their bank.
23 per cent of respondents in the Business Finance Barometer, independently commissioned and published by Close Invoice Finance, stated that they hadn’t asked for increased credit from their bank for fear of either being turned down, or the bank deciding to increase the cost of their existing borrowing.
Rob Harris, local head of Close Invoice Finance said: “At a time when the country is struggling to get back on its feet, it’s astonishing that small businesses, the very engine room of our economy find themselves in a situation where they not only feel unable to access funds to grow, but actually lack the confidence to even ask for it in the first place.
“The survey also demonstrated that almost a third of businesses in the South West aren’t happy with the level of personal service they are receiving from their bank. Ironically though, our last Barometer showed us that the majority of firms remain reluctant to change provider – perhaps a case of better the devil you know.”
The research also revealed that businesses in the North West are least happy with the service from their bank (32 per cent), with firms in the South East at the other end of the spectrum, with 17 per cent discontent.
“It’s great to see that a third of businesses across the UK have plans for expansion over the next 12 months, but of course they will need to raise funding to do this.
“Given that so many appear to have somewhat broken relationships with their banks, it’s especially important that they realise there are other options open to them,” he said.
Invoice finance has been cited by the government as having a ‘crucial’ role to play in the recovery of the private sector. It’s a flexible means of funding that is moving steadily into the mainstream – it is currently outperforming all other types of business lending according to new statistics from the Asset Based Finance Association.
Total advances from members of the Association grew 9 per cent in Q1 of this year, compared to the same quarter last year. In the same period, bank lending contracted by 2.5 per cent.
“The key benefit of the product is that it can unlock up to 95 per cent of the value of your unpaid invoices, thus helping to ensure a healthy cash flow. Innovative businesses are quickly coming to realise its power but we still have work to do if more businesses are to understand the potential of invoice finance in helping them to achieve their growth strategy,” Mr Harris said.
The Business Finance Barometer is published on a quarterly basis, canvassing the views of 500 SME owner managers across the UK on a range of financial issues.