SME growth held back by lack of awareness of funding options
More than two thirds of small- and medium-sized enterprises (SMEs) plan to access external funding over the next year, but nearly a fifth of business leaders are unaware of the finance options available, new research has found.
Asset manager Boost&Co surveyed 500 UK business leaders for its 2022 Geared for Growth report.
Despite 70.2 per cent planning to secure funding for growth, 16.6 per cent of firms reported a lack of awareness of the options available.
And 21.6 per cent of businesses believe access to funding is a significant barrier to achieving growth – the second largest obstacle to growth after the ongoing impact of the pandemic.
Read more: Tenth of SMEs see crowdfunding as their preferred finance option
Furthermore, 31.4 per cent of business leaders believe that their company has a lack of understanding around the funding process.
Boost&Co said that nearly 10 per cent of funding applications in the past two years were rejected by a traditional bank or another lender, suggesting that SMEs require greater support during the funding application process.
Read more: Funding Circle commits to updated SME Finance Charter
Read more: SMEs seek growth funding as Covid recovery continues
“It is evident that there is a real appetite for growth from UK SMEs, but it is also clear that there is a lack of awareness around how this growth can be achieved,” said Joanna Scott, managing director at Boost&Co.
“To narrow this knowledge gap, it’s crucial that business leaders are made aware of growth strategies and alternative routes to funding. Funding is a partnership, so equity investors, lenders and advisors must support businesses in understanding the process.
“There are many ways that business leaders can make their 2022 growth ambitions a reality, be it through greater access to resources, advice or alternative sources of funding. Debt funding is a great option for businesses looking to scale up but a route that only 63 per cent of the business leaders we surveyed had taken, either via a bank or another lender.”
