Funding issues challenge SMEs’ path to growth

SMEs are still reporting significant challenges when accessing and receiving funding support, according to new research from Shawbrook.

Of those SMEs that had applied for funding over the last 12 months, nearly half (46%) said that it had not met their specific needs, with 45% saying they found the funding process confusing, long winded (28%) and lacked flexibility (20%).

Shawbrook surveyed decision makers at 500 UK SMEs and found that many were still using some element of personal funds to help towards fuelling their business’ growth. Surprisingly, this was most prevalent amongst larger, more established businesses. While these businesses may also be using other finance products, 53% of all SMEs admitted to still using their personal savings, and this rises to 63% for businesses with between £25m and £50m in turnover.

In addition, 54% of SMEs say they are still using a personal credit card to fuel growth, with 40% planning to do so in the future, and 39% using personal loans.

While 89% of decision makers at SMEs surveyed by Shawbrook said they felt confident they knew what funding products were right for their businesses, the reliance on personal funds and dissatisfaction amongst those that have received funding suggest that this may not be the case in reality. With 46% suggesting their recent funding did not meet their needs and a further 46% saying they were not provided with the appropriate options when they applied., it seems that SMEs are more in the dark over their funding needs then they realise.

One major pain-point highlighted by SMEs was the lack of personal support from lenders when dealing with their funding needs. 44% of those who had recently applied for finance complained that they had not received any ongoing support, while 13% said they were unable to speak to a person about their requirements.

Neil Rudge, Head of Enterprise at Shawbrook commented: “The UK SME funding landscape offers a variety of options, but many come with limitations. These options can often be restrictive and lack the flexibility needed to address the unique challenges faced by growing businesses.

“Founders require creative solutions that go beyond traditional loans. They need a personal touch – someone who can truly understand their vision and craft a financing strategy that considers both short-term needs and future aspirations. This might involve combining different financing products, like debt and equity, to create a bespoke solution that fuels long-term growth.

“Unfortunately, mainstream finance often falls short in this area, which could be why so many business owners are also using personal funds as well as other finance options. The in-depth analysis and tailored support that founders crave are often reserved for large, publicly traded companies or a privileged few. The reality is, most business owners are willing to pay a premium for a service that truly understands their business and helps them achieve their goals.”