Nonwarit - Fotolia

Ambitious SMEs are open to using finance

Some of the SMEs looking for growth this year are using finance to speed up that process

The larger SMEs appear to have a couple of things in common, optimism about the future and a willingness to use finance to support growth.

The findings of the latest quarterly SME Finance Monitor from BDRC took the pulse of the market in Q4 and found that Brexit was not having a big impact and the more ambitious firms were using finance to fuel growth.

The timing of the revelations comes a day after Tech Data tooks steps to beef up its channel and finance team encouraging more SME serving resellers to use finance to support their own growth ambitions.

“There have been no dramatic market changes in SME sentiment since the referendum. Whilst there are some increased concerns about the economy and political uncertainty, larger SMEs in particular are more likely to be planning to grow and to be using finance, as are those SMEs with a long term objective to be a bigger business," said Shiona Davies, director at BDRC.

“4 in 10 SMEs are planning business activities that might benefit from funding, but SMEs are as likely to think they would fund a business opportunity themselves as approach a bank for funding," she added.

Credit has always been an issue in the SME market with many firms convinced that they will be turned down for finances and choosing to be non-borrowers as a result.

The BDRC survey found that 70% of SMEs admitted they would be happy to grow more slowly instead of using credit to speed things up. Last year the number of firms that were happy to borrow to help the business grow dropped to 34% from a level of 45% in 2016.

The difference with those firms that are seen as 'ambitious risk takers' is that they are more engaged with finance and 40% are planning an activity that might require funding.

“It is encouraging that increasing numbers of small firms are looking to use finance to grow their business in the year ahead," Stephen Pegge, director of commercial finance, UK Finance.

“However, most SMEs are still self-funding, with the vast majority not seeking any new external finance in the past year," he added.

Read more on Finance and Credit