57% of UK start-ups have never applied for a bank loan

Move to alternative finance as 11% of small businesses turn to crowdfunding

New businesses are having their growth “stifled” by a lack of awareness of funding alternatives and access to UK lending options, findings released today by Dell, Entrepreneur Country and Grant Thornton suggest.

The ‘Future Finance’ survey reported that a greater transparency of funding options is required with 57% of entrepreneurs polled admitting to never having applied for a bank loan on the belief that they would get refused credit, or that self-funding would be more beneficial.

Assessing ways to improve the small business funding landscape, the survey suggested that alongside visibility of primary funding sources such as bank loans, education about alternative finance would help to ease the “funding gap”, with a percentage of businesses already turning to crowdfunding (11%) and investment firms (14%) to support their ventures.

Succeeding access to finance, Government legislation polled as the second largest obstacle to small business success and a quarter of respondents felt that increased transparency of government-backed funding schemes would facilitate better awareness.

Despite a general feeling that more needs to be done for start-up finance, the findings were not all cautionary and the majority of entrepreneurs surveyed felt government had a “a much better understanding” of small business needs then it did five years ago.

Julie Meyer, founder of Entrepreneur Country and venture firm Ariadne Capital, discussed the findings:  “Entrepreneurs and small businesses are resourceful by nature.

“Empowering them to extend that innate resourcefulness to their financial requirements is key to improving access to funding. These findings shine a spotlight on the need for funding alternatives, and the demand for more transparency and education on the full spectrum of options.”

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Partner at Grant Thornton, Nick Watson, continued:

“Small and early-stage businesses will be finding today’s funding environment a far more challenging landscape than it was pre-recession, as banks have taken a more prudent and interrogative approach to lending.

“However, there are other methods of funding available which often suit the risk profile of these dynamic organisations more appropriately than traditional bank lending. The flexibility of some of these models may allow businesses that extra bit of agility needed to capitalise on available growth opportunities.”


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