Most SMEs feel unable to access bank loans as conditions decline
60 per cent of small- and medium-sized enterprises (SMEs) are not confident they can secure finance from banks, new research has found.
This is a nine per cent increase from the first quarter, according to surveys conducted by business lender Capify.
While confidence declines in access to finance, SMEs are seeing their cash levels drop as well.
Read more: SMEs say banks won’t lend to them
The second-quarter survey revealed that bank-held cash levels had more nearly halved in the past six months, with the average now standing at £95,726 compared to £188,474 in the fourth quarter of 2021.
45 per cent of respondents cited reduced cash reserves as a direct consequence of inflationary impacts, whilst over one third saw a reduction in working capital.
“We know that access to finance is vital for smaller businesses struggling with these unprecedented challenges,” said John Rozenbroek, chief financial officer at Capify.
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“UK smaller businesses are the lifeblood of our economy and when they stop investing and creating jobs it has wide implications.”
Capify’s findings come as another survey from business lender Bibby Financial Services showed that 79 per cent of SMEs think the current economic climate is worse than the pandemic.
41 per cent said they are cutting back on investment due to the cost of doing business, 43 per cent of SMEs are cutting costs overall, and 47 per cent are passing higher costs to customers.
17 per cent said they were considering turning to short-term lending to help address inflationary pressures.
Read more: Third of SMEs won’t survive without access to finance