Funding options - Are your customers missing out?
In our latest bi-annual SME Pulse survey, more than one third (36%) of SMEs - equal to 1.8 million UK businesses* - plan to invest in their business during the second half of 2014 but many are unaware of the range of finance options available to them, particularly when it comes to alternative finance.
The survey of 1,500 UK SMEs** reveals that one third (33%) of SMEs don’t understand what alternative finance is or know how to take it out. A similar proportion (29%) admit to being altogether unaware of it as a funding option. Awareness levels are lowest among sole traders, with eight in ten admitting that they didn’t understand or were unaware (84% and 80% respectively).
Almost three quarters (70%) say that they perceived alternative finance as a riskier option than applying for traditional finance via their bank. This is despite the benefits of alternative finance reported by many SMEs. Half (51%) of those who have previously applied for alternative finance say that they did so on the basis of better rates and greater flexibility than using a high street bank, and one third (31%) said it was easier to secure alternative finance than getting a loan from the bank.
Robert Ledger, head of small business at Aviva, said:
“High street banks will always be an important port of call for many SMEs – whether they are at the beginning of setting up a new business, or seeking investment to expand an existing one. However, with the rise of alternative finance options and increasing media focus on schemes such as crowdfunding and peer-to-peer lending, it’s important for small businesses to understand that there are a variety of options open to them outside of traditional finance methods, designed to suit differing business needs.”
Further information on funding options can be found on the government website www.greatbusiness.gov.uk.
To read the full article click here.
* Figures obtained from the Department for Business Innovation and Skills http://www.fsb.org.uk/stats
** Aviva commissioned research with Redshift among 1,500 SME business owners and decision makers GB adults online in June 2014.
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