Number of small businesses successfully accessing finance soars
Just 10% of small businesses access finance to invest in research and development, despite it being a key driver of success
The number of small businesses being approved for development finance has risen from 27% in 2014 to 44% this year, according to Albion Ventures’ third Albion Growth Report.
The survey of 1,000 small and medium-sized enterprises found that 29% of those seeking finance were doing so to invest in new equipment, 24% to develop new products and services and 17% to fuel research and development.
Despite being seen as a key driver of long-term success, just 10% said they sought funding to invest in research and development.
The number of firms using traditional finance such as bank loans and overdrafts has fallen significantly from 76% in 2013 to 49% in 2015, while third party equity or long term finance has soared in popularity from 6% in 2013 to 34% this year.
Although the picture is improving, nearly one in five (18%) respondents claimed they had been affected by a lack of access to finance, with entrepreneurs aged under 35 most likely to struggle to raise funds (28%) – almost double those over 55 (15%).
By sector, manufacturing companies are the most likely to seek equity finance (43%) followed by IT & telecoms firms, with the construction industry the least likely at 19%.
Patrick Reeve, managing partner at Albion Ventures, commented: “It is a hugely optimistic climate, and we should be encouraged by the revelation that such a high percentage of firms are looking to raise finance to grow and innovate.
“There is also a clear trend toward non-bank lending such as the popularity of bank loans and overdrafts have continued to fall. What is particularly welcome is the emergence of the ‘Dragon’s Den generation’ – those under 35 who embrace an equity culture.”