Finance · 4 October 2018

A fear of the future is holding back innovation among small businesses

fear of the future
Fewer businesses introduced new products or services in 2018 compared to the previous year
Fear of the future is putting the squeeze on SME finance and innovation, according to a new study, with demand for external finance limited.

The latest figures from BVA BDRC’s SME Finance Monitor for the second quarter of 2018 found that only 4% of SMEs had applied for some form of new or renewed finance, such as loan or overdraft, typically from their main bank, over the last 12 months.

Overall, 15% of SMEs reported some form of borrowing “event” but most had been “happy non-seekers” of finance.

Over a quarter of small business owners had received an injection of personal funds into the company, with 36% using trade credit up from 31% in 2014. Just under a quarter held more than 10, 000 in credit balances stating that this reduced their need for external finance.

Just over half of small business owners felt that the future felt uncertain and, as such, they were being very cautious with their plans for the business.

Over three-quarters of SMEs reported making a profit, with four in ten having grown in the past 12 months. Just under half 47% planned to grow in the next 12 months, increasing by size of SME from 44% of those with 0 employees to 81% of those with 50-249 employees.

referral finance


Refused a bank loan? These small businesses accessed finance through the Bank Referral Scheme

Initially launched in November 2016, the Bank Referral Scheme was designed to help small business owners access finance if bank lenders were unable to offer what they needed.