ALMOST a third of businesses don’t seek an adviser to assist them with external funding which could be problematic if banks rein in financing for Brexit, according to ThinCats.
“Given the double whammy of a global economic slowdown and Brexit, it’s quite likely that banks will rein in their funding for small- and medium-sized enterprises (SMEs) even further,” Damon Walford, ThinCats chief development officer, said.
Amongst those that did seek advice, 22 per cent used an accountancy firm, 21 per cent used a corporate finance adviser, and 20 per cent used a commercial finance broker, according to a survey from the peer-to-peer business lender.
“The good news is that there are alternative lenders like ThinCats with substantial funds to lend that simply didn’t exist at the time of the financial crisis,” Walford said. “As the universe of products available from non-bank lenders is continually developing, we would urge businesses looking for funding to engage with a professional adviser.”
ThinCats surveyed 512 UK SMEs with between 10 and 249 employees. It also found that 30 per cent of SMEs rejected by their first-choice lender stopped searching for external funding altogether.
55 per cent of those surveyed said high street banks were the first lender approached. The survey also found that 27 per cent of businesses said they applied for funding within the last year.
“Lots of businesses we speak to have made clear plans for the future: they generally want to expand, fund changes in business ownership or improve their current funding arrangements through refinancing,” Walford said.
“It’s critical that businesses don’t miss out on potential funding from not being aware of the new funding alternatives that are now open to them.”
Walford’s comments come during small business advice week. The British Business Bank said earlier in the week that 81 per cent of smaller businesses did not seek advice when applying for external finance last year and only 14 per cent researched finance options online.