Only one fifth of small businesses have used financial support, including business loans, invoice finance, peer-to-peer lending and finance leasing, in the last 12 months, research finds.
Instead businesses turn to their own bank accounts (30 per cent), overdraft facilities (16 per cent) and their own families (7 per cent) to access the cash needed, according to a study by Hitachi Capital.
Small and medium-sized enterprises (SMEs) are struggling to expand and grow their teams, with six in ten SMEs (60 per cent) expecting to stay at their current size or scale down and only 6 per cent expecting to experience significant growth, the study of some 1,000 small business owners reveals.
Cash flow is identified as the biggest worry for SMEs, with almost one third (30 per cent) of small business owners saying they are being kept awake at night by this issue. Worries are caused by a range of factors including late payments from customers and unexpected costs and charges.
Insight from Hitachi Capital shows 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.
April, the beginning of a new tax year, forces SMEs to get up to speed with a host of new legislation, including the new National Living Wage and several new immigration laws.
In July, holiday season and a reduced workforce takes its toll on smaller companies, while in October businesses are under pressure to meet the retail demand of Black Friday and the festive period.
Financial solutions, such as invoice finance and business loans, can help small businesses to deliver efficient and successful operations across the year.
Gavin Wraith-Carter, managing director at Hitachi Capital Business Finance says, ‘The UK’s SMEs account for 99 per cent 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.’
Further reading on cash flow
See also: Sources of funding to open a restaurant