Recent research suggests that almost half the of the small firms in the UK have never accessed business finance, although 29 per cent say they have used their overdraft facility to fund their business.
According to the research, 16 per cent of the small business owners polled have taken an unsecured business loan to boost the firm’s finances, while just over 10 per cent used a commercial mortgage.
Meanwhile, only nine per cent said they had used asset finance, while seven per cent used invoice financing and five per cent said that they had used another type of loan secured by debenture or charge.
However, it is likely that more owners of small businesses could be looking at external finance as they prepare for Brexit, according to one of the study’s authors, but if they do, they should take independent advice, as many lenders look for personal guarantees, which can be tricky.
This is one of the reasons why the Government has launched the Business Finance Council (BFC), which will ensure that small firms get access to finance and will be treated fairly by lenders.
As Small Business Minister Kelly Tolhurst said recently, the Government has pledged £1.3 billion to support lenders through the BFC’s ‘SME Finance Charter’ guarantee scheme.
She added that the guarantee scheme aims to give confidence to small firms and to overcome the perception that lenders do not want to advance funds to small businesses.
Nigel Fry, General Practice Partner at Milsted Langdon, said: “Business finance is a key consideration for any firm, with access to finance often representing an obstacle. The figures show that almost half of all SMEs haven’t accessed business finance before, which could be preventing them from reaching their goals.
“For advice on matters relating to Corporate Finance, contact our expert team today.”