South East: SMEs shifting away from traditional funding, says Close Brothers

SMEs in the South East are opting to use asset finance and personal funding ahead of traditional bank funding according to the results of the latest Close Brothers Business Barometer.

The quarterly survey, which canvasses the opinion of SME owners and managers throughout the UK, showed that a quarter of firms in the region rely on asset finance, making it the most commonly used method of business funding, closely followed by personal finance which is the main form of funding used by 16% of those surveyed.

15% of local firms polled said they rely on bank overdrafts while a further 12% prefer to use bank loans.

Commenting on the figures, CEO of Close Brothers Asset Finance, Mike Randall, said: “It’s great to see that so many firms are utilising asset finance as a sustainable way to fund their business. It’s also interesting to find that so many small and medium-sized firms are relying on personal finance given that bank lending was traditionally the main source of finance for most companies and there are so many other viable ways to fund your business without drawing down on your own finances.

“These figures signal a shift in SME attitudes towards finance which appears to be moving away from traditional reliance on bank lending.”

The Business Barometer also revealed that a third of South East SMEs consider accessing finance to be a challenge.

Randall added: “With access to finance still one of the main challenges facing SMEs in the region, we would urge all businesses to widen their search and consider all the means of funding available to them.

“Asset finance is a sustainable and flexible form of funding that allows firms to either purchase new assets or unlock the capital tied up in their existing assets, providing a cash boost that can be reinvested back into the business.”