Three quarters of SME owners are scared of the risk of debt to a level that it prevents them from seeking external funds, research from Wesleyan Bank has revealed.
The research revealed a ‘non-borrowing culture’ among small businesses which could potentially be holding businesses back.
It also found that SMEs would rather turn to Google as a source of financial advice than contact their bank or a broker with many seeming unaware of the value of financial advice.
Just 2% of those surveyed borrow money on a regular basis whilst they prefer to stick to traditional funding options such as bank loans and overdrafts over alternative options such as asset finance.
Sean Read, director of sales and marketing at Wesleyan Bank, said: “Without external finance, many SMEs are stilting their chances of prospering and fulfilling their ultimate potential. It’s only natural for small businesses to be cautious about making a financial investment, but there’s an equal risk in failing to seek support for growth.
“The SME community needs to understand the plurality of finance options available to them, beyond relying on internet-based research alone. Trusted and leading providers, such as Wesleyan Bank, are able to explicitly support SMEs by offering specialist products and guidance that is tailored to their growth plans and business situation.
“The recession may have instilled a ‘non-borrowing’ culture into the mindsets of many SME owners, but now we’re working in a better economy, it’s time for them to broaden their horizons. SMEs are the lifeblood of the UK economy, after all.”