The market place is a picture of austerity and for SMEs the fight for survival is one fraught with difficulties. But add a reduction of available funding to the mix and things begin to look dire indeed.
Decreased economic activity means many small and medium-sized enterprises (SME) are currently facing shrinking profits. Which will be worrying enough in itself for those at the helm. But when banks and building societies are also tightening their belts and limiting access to funding, suddenly the outlook seems much grimmer.
According to a survey conducted by Bibby Financial Services (BFS), SMEs are still finding it too difficult to access the funding they require. That isn’t helped by the fact that the number of SMEs applying for funding is decreasing: less than a third of those polled by BFS had applied for funding during the previous year. But out of those that required additional cash, only 29% managed to make successful applications; 14% did secure some funds but found the total was nowhere near enough to carry out planned initiatives.
And BFS isn’t the only one drawing a rather glum picture of SME finance: figures from the Bank of England support these findings, demonstrating lending by financial institutions fell by £3bn in the three months running up to May. Not an uplifting portrayal of the nation’s financial landscape.
But fortunately it seems change may be on the horizon. With the recent launch of the Government’s Funding for Lending scheme, ready access to funding should become far more available for small businesses. Whilst the report identifies that sole dependence on banks for finance isn’t healthy, suggesting that more steps need to be made toward embracing solutions such as crowdfunding, this at least signifies a potential thaw in the lending freeze. Check out our exclusive feature on alternate sources of funding in August’s issue of Elite Business.