Businesses are failing to access the full range of financial solutions that could help them drive business growth despite half of small businesses needing support with cash flow, research from Hitachi Capital has found.
Only one fifth (21%) of SMEs have used financial support, including business loans, invoice finance, peer-to-peer lending and finance leasing in the last 12 month.
Instead businesses are using their bank accounts (30%), overdraft facilities (16%) and their own families (7%) to access the cash needed.
Gavin Wraith-Carter, managing director at Hitachi Capital Business Finance, said: “The UK’s SMEs account for 99% of our entire economy, so it’s critical that we enable them to efficiently manage their business and support them in their growth ambitions.
“Peaks and troughs across the year are inevitable for any small business and accessing financial solutions can help manage these periods as well as helping to overcome any unexpected hurdles.
“At a time when many banks are withdrawing overdrafts and cutting back on business loans, business owners need to consider the full range of options available to them. Innovative finance solutions, such as invoice finance, business loans and finance leasing, are cost effective, simple and straightforward, and can help prevent sleepless nights for SME owners.”
Cash flow was identified as the biggest worry for SMEs, with almost one third (30%) of small business owners saying they are being kept awake at night by this issue. Worries are caused by a range of things including late payments from customers and unexpected costs and charges.
Hitachi Capital found that April, July and October are the times when small business owners are most in need of help and when cash reserves are low, making it even more important to plan ahead.
The research, commissioned by Hitachi Capital, surveyed over 1,000 small business owners on their business outlook for the next 12 months.