Published: 09 Dec 2011
Last Updated: 06 Nov 2012
A worrying picture of exactly what it’s like to run a small business from borro.com, which has had an in-depth look at SMEs’ borrowing habits (or lack thereof). According to a survey by the online lender, over the past year, a quarter of small business owners have ‘missed out’ on an opportunity which would help them grow because they haven’t had access to the right finance, while 11% have considered closing their business because they can’t raise cash. Which is exactly the opposite of what David Cameron, George Osborne et al will want to hear, under the circumstances…
Admittedly, borro only surveyed 300 small business owners, so the picture it paints may not be an entirely accurate rendering of UK SME experiences. But it’s fairly in line with complaints we’ve heard in the past: while, for example, 57% said they’ve had to use personal funds to help free up some cash for their business, 17% said they’ve borrowed off family and friends and 16% said they’ve used personal assets, such as their house, to secure finance for their businesses.
Despite the best efforts of schemes to persuade banks to lend (ahem, Project Merlin), 66% said they lack confidence in their bank and that they’re unsure whether it will lend to these. And while 19% said that over the past year, they’ve bitten the bullet and applied for a loan, of them, fewer than a third were actually able to secure the finance they were hoping for in full. Which, by our reckoning, is around 18 entrepreneurs, out of the original 300, who managed to borrow what they needed. Doesn’t sound good, does it?
To be fair to lenders, it’s slightly more understandable when you look at the reasons people are borrowing: while nearly half said they were applying for a loan because of cashflow issues and just over a third said it was because of late payment (both fair enough), a quarter said they needed the money to pay tax bills and 17% said it was to pay wages. Which isn’t, we’d imagine, the sort of thing that pleases lenders. Although another 17% said it was to develop new products and services. Which sounds a lot more palatable to the easily spooked.
Still: following the Chancellor’s Autumn Statement, in which he once again impressed the need for lenders to start lending again, this suggests that somewhere along the line, something’s still wrong.
Admittedly, borro only surveyed 300 small business owners, so the picture it paints may not be an entirely accurate rendering of UK SME experiences. But it’s fairly in line with complaints we’ve heard in the past: while, for example, 57% said they’ve had to use personal funds to help free up some cash for their business, 17% said they’ve borrowed off family and friends and 16% said they’ve used personal assets, such as their house, to secure finance for their businesses.
Despite the best efforts of schemes to persuade banks to lend (ahem, Project Merlin), 66% said they lack confidence in their bank and that they’re unsure whether it will lend to these. And while 19% said that over the past year, they’ve bitten the bullet and applied for a loan, of them, fewer than a third were actually able to secure the finance they were hoping for in full. Which, by our reckoning, is around 18 entrepreneurs, out of the original 300, who managed to borrow what they needed. Doesn’t sound good, does it?
To be fair to lenders, it’s slightly more understandable when you look at the reasons people are borrowing: while nearly half said they were applying for a loan because of cashflow issues and just over a third said it was because of late payment (both fair enough), a quarter said they needed the money to pay tax bills and 17% said it was to pay wages. Which isn’t, we’d imagine, the sort of thing that pleases lenders. Although another 17% said it was to develop new products and services. Which sounds a lot more palatable to the easily spooked.
Still: following the Chancellor’s Autumn Statement, in which he once again impressed the need for lenders to start lending again, this suggests that somewhere along the line, something’s still wrong.
