Lack of finance causes UK firms to lose £77,651 a year in missed opportunities

1.04 million firms affected by lack of finance with medium sized businesses of between 50 and 249 employees worst hit

The average UK business is missing out on around £77,651 every year in missed opportunities due to a lack of finance, according to the Aldermore Future Attitudes report.

The survey of over 1,000 businesses from across the country found that 19% of the UK’s small and medium-sized enterprises – around 1.04 million firms – have been unable to take advantage of a new business opportunity because of a lack of access to finance.

Medium-sized businesses with between 50 and 249 employees were the worst affected with 32% claiming to have suffered. This resulted in an income loss of around £112,508 per company over the last year.

By comparison, 28% of small businesses (10-49 employees), 15% of micro businesses (fewer than 10 employees) and 9% of sole traders said they had missed out on business opportunities due to a lack of finance.

18% of respondents reported to have used traditional bank lending to fund their business, while alternative finance such as asset and invoice finance accounted for 14% of funding accessed by small businesses.

A recent study from the Asset Based Finance Association (ABFA) found that asset finance rose 13% over the last year to a record £22.2bn, with 7% of this growth happening in the last quarter of 2016. The report speculates that this was as a result of financial instability following the Brexit vote, with many businesses turning to asset finance in order to create a “cash cushion”.

Learn more about asset finance and why you should consider it here

80% or £17.9bn of that total was made up of invoice finance, with the other 20% consisting of asset-based lending, in which businesses can raised investment secured against inventory, property and machinery.

Carl D’Ammassa, group managing director of business finance at Aldermore, said: “With more than two fifths of small businesses saying that their key business priority for 2017 is achieving business growth, it is frustrating to see that so many firms are missing out on business opportunities due to a lack of appropriate funding.

“In our experience, UK small businesses have retained their ambitions to grow despite the uncertain economic environment, so it is vital that the finance industry gives them every chance to succeed.

Jeff Longhurst, chief executive of the ABFA, commented: “All sizes of UK businesses need to be aware of the possibilities and opportunities that asset based finance can provide them beyond what traditional sources can often offer them.”

If you're struggling to access a bank loan, here are 10 other ways to fund your business


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