Small business funding deficit could cost UK economy £2.9bn

New research suggests overdraft facilities have been withdrawn at a rate of £5m a day over the last four years

A funding deficit for UK small businesses is preventing growth and costing the economy, according to new data from alternative finance supermarket Funding Options.

According to the survey, a lack of funding from high street banks in the wake of the recession is inhibiting small business growth and could cost the British economy up to £2.9bn in potential turnover loss from small and medium-sized enterprises.

Regulation requiring banks to maintain higher levels of capital reserves has discouraged lending, while overdraft facilities have decreased at a rate of £5m per day since 2011.

With alternative finance providers not yet established enough to counterbalance the deficit, many businesses have experienced cash flow problems and stymied growth.

The study also found that businesses with net debt higher than 50% of their assets grew 15.7% on average during the last five years, while companies with debt less than 10% of their assets grew just 14%.


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