SMEs avoid traditional lenders

SMEs avoid traditional lenders

Traditional lenders are being avoided by most SMEs at all costs, who are opting instead to use their own personal savings to boost their business.

It is estimated that around a third of SME owners would prefer to put their own money into their business than borrow money from traditional lenders. The figures have come emerged following a study carried out by Hitachi Capital Invoice Finance, which shows that around 80% of SME owners have already invested their own money into their business. This trend is particularly high in the North East of England, where all company owners that took part in the survey stated that they had invested their own money into their business. In Yorkshire and Humberside, the figure was 92%.

More than half have chosen to use their own funds to help to develop their business because they do not want to owe any money to a third-party, while a tenth of company owners have admitted that borrowing money in the past has led to even more debt.

More than 500 SMEs took part in the survey, but only 15% of these stated that they do completely trust traditional lenders. Hitachi Capital Invoice Finance Managing Director Andy Dodd has stated that this is an interesting trend, but lack of trust in traditional lenders has the potential to affect the growth of the business in the future.

The survey also suggests that 20% of businesses consider cash flow to be their chief concern, which may indicate that cash flow is something that they struggle with. All business owners should find out more about the many different funding options that are open to them – non-traditional lenders that help prioritise overdue payments are but one example.. Interestingly, there appears to be greater trust in traditional lenders among start-ups that are less than a year old, and among younger business owners. Companies that have been established for longer find it much harder to trust traditional lenders, although around two-thirds of London-based businesses stated that they do trust them.