Risk of debt stops 78% of small businesses seeking external funds
Shocking research shows more small firms prefer to use Google for financial advice than to consult with a bank
A ‘non-borrowing culture’ is growing among the UK’s small and medium-sized businesses with 78% of small firms admitting to being too risk-averse to look for external investment.
The data, highlighted in new research by Wesleyan Bank of 543 UK small business owners, also found that more than 39% of small enterprises have opted to use Google for financial advice than to consult with a bank.
Given this high proportion of businesses using search engines for advice, Wesleyan has said that many founders may be unaware of the various funding options available to them such as crowdfunding and invoice finance, alongside traditional means such as bank loans and overdrafts.
Many of the business owners surveyed also had rather low levels of ambition for their business; just 2% said they would look for equity backing in the future, and only 7% said their aim was for their company to be acquired.
Sean Read, director of sales and finance at Wesleyan Bank, said that the research showed that small firms are “stilting their chances of prospering”:
“It’s only natural for small businesses to be cautious about making a financial investment, but there’s an equal risk in failing to seek support for growth.
“The small and medium enterprise community needs to understand the plurality of finance options available to them, beyond relying on internet-based research alone.”